Is it possible then to setup or maintain a successful business, or to completely revamp an existing business? The simple answer – Yes, it definitely is!
A wonderful route to follow in this regard is a business partnership.
“What is a partnership”, “Will this work for me?”, and, “What if we don’t get along,” I hear you ask. Firstly, let’s get down to the basics about partnerships to analyze what it’s all about before we decide if this will suit you.
WHAT IS A PARTNERSHIP?
A partnership in simple terms is two business entities or business people working together. They share skills, knowledge, capital, assets, employees and the like to help the business grow and prosper.
FITTING THE CORRECT PARTNERSHIP
Partnerships come in all shapes and sizes. There are General Partnerships, Limited Partnerships and Strategic Partnerships. Below is a short explanation of all three, rating the positive impact each can have on your business:
Outfit One: “The Summer’s Dress” – General Partnership
A general partnership is a lot like a summer’s dress. It is not only worn to specific places or functions, but can generally be worn to a variety of places and functions. A General Partnership has the same basic principles. Both partners handle the management of the business and all profits and losses are divided equally. Personal income tax is filed for each partner. Knowledge, skills and experience is shared amongst both as well.
Outfit Two: “The Business Suit” – Limited Partnership
As with a business suit, a Limited Partnership has specific functions or tasks that each partner agrees to. One partner will take over the managerial responsibilities of the business, whilst the other partner may only contribute in terms of knowledge, assets or capital input. In this partnership you might also get your “silent partners”, those that contribute only capital or assets without being actively involved in the business. With profit division, they also benefit.
Outfit Three: “The Little Black Dress” – Strategic Partnership
All women know that a little black dress is a must-have in any wardrobe. It can be worn to basically any type of function or event. It is the same with a strategic partnership. It is a no-fuss partnership that doesn’t require a lot of paperwork and legal hassles and can be finalized over a handshake or a cup of coffee.
Both partners agree how each one’s unique business or business skills will support and contribute to the shared business. Trademarks might be shared, manufacturing or marketing of one can support the other, etc. The idea behind a strategic partnership is to utilize all aspects of each business so that both businesses can grow and prosper.
FLAWS IN THE OUTFIT
As with anything in life, no outfit is without flaws. Partnerships sometimes have a habit of not always running smoothly, but knowing what can happen or what to expect can prepare you for the worse. It will give you the “sewing kit” in your bag that you need to cope and survive and mend the problems that arise:
- Make sure you are aware of each partner’s legal responsibility in terms of decisions made or allowed to be made by you and your employees, as well as responsibility in terms of debts, liabilities and actions.
- Depending on your type of partnership, tons of paperwork filed correctly and at the correct places might need to be in order to avoid possible future legal hassles.
- Death or withdrawal from the business can and will impact your partnership – make sure that each one knows how this will affect them and how it will be handled when and if the time comes.
- Transferring your duties or a change in ownership is also going to impact your partnership, get guiding documents in place for this.
- Up-scaling your business is a good thing, but make sure the admin is done correctly, in terms of under which company the employees are hired, salary payments are made, etc.
Taking all of the above into account might leave you a little nervous. Not all of us starting out on our business journey have access to all the legal aid required to make a success of a business partnership help grow or up-scale our business. But therefore a Strategic Business Partnership is a wonderful way to start. An agreement can verbally be reached and a standard document typed for future guidance and reference.
So take the plunge – go into a strategic partnership and see you and your partner’s businesses grow to new levels! Live and grow your dreams every day!
ENJOYED THIS BLOG?
Please feel free to comment on the value you gained from this blog!
Ebere Akadiri is an entrepreneur who also loves to teach what she knows to aspiring entrepreneurs, business owners and creatives. She teaches them the right actions to take to create and package products that sell while building a successful company. She is the founder of Ataro Food and Spices.