Exploring Business Partnerships: Is a partnership right for you?
In the world of business, a partnership is usually intended to broaden the scope of business, consolidate business operation, enhance efficiency and increase profitability. Finding the right partnership could be a very fruitful and beneficial endeavor for both parties. Partnership is a very delicate decision and must be carefully considered and implemented. It is imperative to have adequate information on your prospective partner before opting for a partnership. Your prospective partner’s business history, relevant skills and personal character are crucial considerations that must not be trivialized. Before you decide to enter a partnership, you must ask yourself if that is what you really need for your business. With that being said, let us explore some of the benefits and drawbacks that come with the decision to opt for a partnership business.
Benefits of business partnerships include the following:
- Exposes your business to contracts: One of the most impressive benefits of a business partnership is that it can increase your chances of getting relevant contracts. When seeking partnership, it will help to get a party that has a robust network and investment capability. Essentially, partnerships should facilitate business expansion and expose your business to a significant number of contracts.
- Monetary support: Monetary support is a very crucial aspect of business and could enhance or restrict business growth. Without adequate funding, business suffers from lack of expansion, inefficient operations, profitability decline and this could cause the business to fold up. It is imperative that you get a partner that can make-up for this deficiency in your business. A partner with a lot of capital to invest will certainly bolster the business while repositioning business operations for greater strides and accomplishments.
- Expert consultation: Your partner should be someone who understands the nature of the business and has some level of experience. Having someone that you can deliberate and consult with is an invaluable asset.
Drawbacks of business partnerships include the following:
- Disagreements: One of the most common problems associated with business partnerships is the issue of disagreements and skirmishes. There are instances where the two parties will feel differently about a course of action and this could degenerate into a very unsavory business environment if not handled professionally. Disagreements may arise from a difference in perception, business ethics and many other areas of business. Disagreements in partnerships can have a crippling impact on the entire business. Therefore, it is crucial that both parties are open to honest dialogue.
- Profit sharing: Profit sharing is a delicate aspect of business partnerships and could easily lead to disagreement and conflict. While partnerships have the potential to increase profits and returns, it will also require that these returns are shared between both parties using a predetermined formula. However, there are many instances where this predetermined sharing formula is unfavorable to one party. In other cases, various developments could necessitate the need to review the sharing formula. Profit sharing disagreements could undermine cooperation and trust in a partnership business if it is not handled openly and honestly.
- Control: the issue of control is a very strong subject when it comes to the sustainability of business partnerships. As a sole proprietor, you have unchallenged and unrestricted control over your business. You decide how the business runs and determine what image your business has. You can kiss total control goodbye once you enter into a partnership. Partnerships will significantly lower the extent of control you have and alter your vision and presentation of your business considerably. In most cases, a partnership will mean that certain aspects of business operations will be controlled by the partner. You must decide if you are willing to relinquish some control over your business before opting for a partnership.
Business partnerships are a progressive and profitable way to do business if various considerations are meticulously addressed. It is imperative that you have detailed insight into the nature of your partner before opting for a partnership. It is equally important to discuss all of the specifics and lay the ground rules for the partnership before you decide to join forces. Having a written contract (deed of partnership) that formalizes very sensitive areas of business is a great step in the right direction.
Once in partnership, you must put aside old ways of business operations and jointly forge a new and collaborative technique. Being open-minded and honest is an essential ingredient for a successful and worthwhile partnership. Ultimately, make sure that you investigate your prospective partner beforehand as this could make or break a partnership arrangement.