Entrepreneur Conflict Resolution


Anyone who saw “The Social Network” or lived the life of an entrepreneur knows that conflict is at times unavoidable.  Having been a part of 14 startups and over 50 consulting engagements in my career, I have had my share of conflicts to resolve.  When dealing with entrepreneurs or contractors, there are some basic rules that have helped to avoid conflicts and help in resolving them.

1. Put things in writing.  Conversations are great and probably the best way to truly establish enthusiasm and passion.  What’s more, you need a ‘live’ exchange to fully convey project specifications, goals, and vision.  However, you must follow these discussions up with something in writing.  Most engagements involve a ‘statement of work’ or SOW.  Alternatively, you can simply delineate your understanding of the discussion and the expectations in a series of emails.  The important items to note are:

  • specific features and functionality;
  • clear scope of work inclusions and limitations;
  • due date and schedule;
  • budget, fixed bid or time and materials.

Most projects will require adjustments along the way that sometimes includes additional features, functionality.  Again, put those in writing and be clear.  Make sure both parties agree on the terms before proceeding.

2.  Immediately address issues.  If your contractor is late, don’t wait to address this.  Immediately let them know they are late.  Again, put this in writing so there is a written record.  It’s advisable to be flexible, but that doesn’t mean you ignore or delay on points of accountability.  Later on, you’ll be glad you kept good records of what happened during the course of the project.  It’s twice the amount of work to follow-up after the fact.

3.  Hire an attorney, but you do the talking.  If you do find yourself in a conflict, hiring an attorney is always a good idea as they have the expertise and knowledge to provide guidance.  However, I strongly advise to delay having your attorney do the talking.  Contractors and entrepreneurs typically ‘shut down’ when they receive an attorney correspondence.  Instead, get advice from your attorney on what to do, and usually more importantly, what not to do.  You transmit the communications.  Even if you have to send a strong letter like a “notice to perform” or  a “notice of deficiency”, I would advise to avoid having your attorney sending it out if at all possible.  This will show good faith that while you have a very different perspective on the state of affairs, you’re still willing to work it out amicably without escalation.  Of course, if the other party ignores you or does not ‘perform’, then you may have no choice but to escalate.

Entrepreneur Conflict Resolution

4.  Give the other party several chances to resolve the situation.  There’s both a practical and legal reason to not be too aggressive during a conflict.  Practically speaking, the person may just be having a hard week or may have personal issues interfering with their work.  Offering several solutions and compromises will demonstrate good will and hopefully compel the other party to perform.  Further, if the matter does escalate to a legal level and eventually to a court, you will be able to demonstrate to a 3rd party judge or magistrate your multiple attempts at resolution.  This will go a long way should the situation not be resolved directly.

5.  Take out the emotional aspect.  This is a very difficult lesson to practice.  When we feel wronged, or let down, our emotions often get the best of us.  We say and do things we later regret.  In business, there is no place for this.  Do not react.  Take time to analyze the situation.  If possible, sleep on it.  Calling someone a ‘jackass’ or insulting their work or effort can often tailspin an otherwise fixable situation.  It’s OK to feel wronged and to yell and scream.  In fact, it’s probably great to get it out.  Just don’t do it in writing or on the phone or in person to the other party.  Be emotional in private or among trusted partners.  Focus on the facts of the situation (what you put in writing) and not ‘feelings’.

6.  Hire a professional mediator.  Often times, the real issue around a conflict has everything to do with the people and their egos, and not the project details.  One way to eliminate this factor is to bring in a 3rd party mediator or facilitator.  This does not have to be a professional per se.  You can bring in a respected advisor that has a trusted, independent relationship with both parties.  Several times in my career I have resolved serious problems simply by arranging a meeting and lettering the mediator do the talking.  We found out the real issue was personal and not professional at all.

Sometimes, it’s not possible to resolve conflicts without legal or court intervention, but taking the above steps will certainly keep you in a better position should the situation escalate.  With some calm and reasonable consideration, you may be able to amicably resolve matters which is always the best outcome.



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