Any normal partnership implies the association of the parties to obtain mutual benefit. For example, in business, partners can be not only the organizers of the company but also suppliers of goods and services. As a rule, the partnership between the company owners is legally fixed, but there are cases of verbal agreements in which cooperation is based on trust.
Equitable partnership. Companions have the same powers and equally share the responsibility.
Limited partnership. Here, responsibility is distributed by the share of each of the partners.
Strategic cooperation. This type of partnership is characteristic of large businesses, while the long-term building of commercial relations can be noted.
When business partners own affairs on an equal footing, this does not always lead the company to haste, and the reason is simple – it’s a disagreement. Here you can draw an analogy with two kitchen mistresses who rarely get along. No matter how thorough the planning was at the stage of the birth of a business, sooner or later, contradictions will arise on one or another aspect.
But if the shares are not distributed equally, for example, 60% to 40%, then the last word is always with one person. Of course, the opinion of a smaller partner with a smaller share is always considered, but the main owner makes the final decision for the company.
We should also mention the forced partnership, which is often concluded due to a lack of funds. In most cases, nothing good comes of this because a successful business is built only voluntarily and with people close in character, not just those with start-up capital.
Starting a business alone, entrepreneurs face several difficulties and not only of a financial nature. However, having a partner has several advantages.
- Distribution of tasks. Starting a business is always associated with the need to resolve many issues related to finding suppliers and employees, obtaining loans, concluding various contracts, etc. The partnership allows you to distribute tasks between business partners.
- The moral support. There are situations when a businessman can “give up” due to fatigue, accumulated problems, and other things. Outside help is essential here.
- The financial side of the issue. The partnership reduces the financial burden of each team member because the start-up capital for starting a business is distributed among all partners, resulting in no need for additional lending.
If one of the partners falls ill or has personal matters, then the co-owner of the business will come to the rescue.
Disadvantages of a partnership
Despite all the advantages of partner cooperation, this format also has several disadvantages, which often leads to a quarrel between partners.
- Lack of experience. When you start a joint business, you expect certain results from your partner, but his lack of knowledge may not meet the expectations. It also often causes the loss of the company’s reputation.
- Strategic differences. Partners’ opinions may differ when it comes to some global issues related to the company’s strategic development.
- Conflict over the distribution of profits. The partnership means an equal contribution to the activity, but if one of the team members does less than the other, and receives the same amount, then friction will arise.
The partnership is a mutual responsibility. So, for example, if a partner breaks the law or somehow harms customers, the blame for this will lie with his business partner.