Business partnerships are born in the land of good intentions. However, they are fertile ground for conflict, and they fail because partners all think they’re the boss, among other preventable reasons, according to business psychologist Carl Robinson, an executive coach in Seattle who focuses on the development of high-performance leaders.

Some of the more famous business partnership failures include Coca-Cola and Costco, PayPal and eBay, Shell and LEGO, Daimler and Chrysler, and Kraft and Starbucks.

Partnerships usually form for three main reasons, Robinson says:

• A few people decide to pool their talents, believing they will be able to leverage their combined skills to better meet the needs of the marketplace.
• Most consultants are not strong on sales and marketing and they hope that by having more people involved in rainmaking they will create a more stable business.
• Founders believe that a partnership will be more rewarding than going it alone.

Business partnerships, Robinson continues, fail because of a poorly defined vision and reason for existence beyond simply being a way to make money. Partners may go in opposing directions that meet their own needs but not the strategic needs and direction of the partnership. With a financial structure generally geared toward rewarding themselves above the common good, marginalized partners may eventually get tired of being treated as second-class citizens and leave. Neglected non-partner staff members do not develop a sense of camaraderie and loyalty and may leave for better opportunities.

Insufficient contracts are another reason business partnerships fail, according to New York-based Gouchev Law, which focuses on partnership agreements and corporate restructuring, among others.

Since many partnerships are formed between friends, family members, or close acquaintances, contracts and agreements might seem awkward or like unnecessary formalities.

“Nothing could be farther from the truth,” Gouchev Law wrote in a blog.

“Even the best-intentioned partnerships can fail for unforeseen reasons. When you hit a snag in the plan, it won’t only be your relationship with your partners that might suffer, but the future of your business as well. That’s why it’s absolutely crucial to have the terms of your arrangement in writing.”

Exit Consulting Group develops roadmaps for businesses going through or anticipating a transition, working with owners to exit while the organization continues to thrive.

“Every business owner exits one way or another,” Exit Consulting wrote on its website. The company encourages visitors to its website to focus on how their business will succeed and what their ideal exit strategy looks like rather than worrying so much about why business partnerships fail. 

Here are some tips from Exit Consulting on how to avoid bad partnerships:

Know the person behind the partner: What drives them? What inspires them? Are they an introvert or an extrovert? What are their skills? What are their weaknesses?

Build a business plan: Scrutinize and challenge your assumptions of success. Making a business plan can bring you and your business partner into alignment.

Create clear roles: Two partners focused on the same tasks will create blind spots in the business, including ones they could have recognized in advance and could have been addressed by bringing on additional partners or a leadership team. Plan for growth in each partner’s role.

Agree and sign to terms: A business partnership is only as strong as the paperwork in place, according to Exit Consulting. A partnership agreement usually encompasses allocations, contributions, authority, duration, commitments, dispute resolution, and governance. It should also outline what happens if a partner leaves the business by quitting or death. 

“Having an aligned end goal is critical,” wrote Purdeep Sangha, a business strategist, consultant and personal advisor, in an article for Entrepreneur.com.

Build on incremental success: Lower the stakes. Business owners can build a business plan and partnership agreement on incremental success, letting milestones such as revenue and profit serve as next steps, according to Exit Consulting.

Expect challenges: Business owners have a lot to live up to. Challenges should be acknowledged and dealt with but not dwelled upon. “Take them in stride and work to solve them together. Adversity makes success all the more rewarding,” according to Exit Consulting.