Partnership is a type of business entity in which a single business includes two or more persons share ownership or we can say it is an association that compromises of two or more persons. “Partnership is the relation between (or among) persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”

Point of comment:

The most significant aspect of partnership as per the above definition is that partnership is a relation among persons; and this relation is that of being a partner with one another-very much like relations subsisting among members of a family i.e. relation of brotherhood, sisterhood, parenthood etc.

“Partnership relation is a relation of utmost good faith among persons, who want to be partners with one another. Each partner must observe utmost good faith towards each other, while engaged in business dealings.”

As we have discussed the salient features of partnership in our previous article, in this article we will discuss its advantages. To do a thorough analysis of the advantages and disadvantages of a partnership, start by looking at all the possible advantages that might apply to your situation. A partnership may offer many benefits for your particular business.

Advantages of a Partnership

* Bridging the Gap in Expertise and Knowledge:

Partnering with someone can give you access to a wider range of expertise for different parts of your business. A good partner may also bring knowledge and experience you may be lacking, or complementary skills to help you grow the business. For example, you may be great at generating new ideas, but not so good at selling your ideas. You may be a technology genius but a fish out of water when it comes to building relationships and taking care of the operations side. That’s where a partner with skill and acumen can step in and fill those gaps. This may be one of your first considerations when you examine the advantages and disadvantages of a partnership.

* More cash and cost savings:

More partners mean more capital. It tends to be as simple as that. In most cases, adding additional parties to your partnership agreement means injecting more cash into the business. Beyond that, a partner can help you raise more money through their contacts or by lending their expertise. And they might even be able to enhance your ability to borrow more from third-party sources. Injecting additional capital into the business aside, a partner can also help keep more cash in your pocket as well. Each partner shares the financial burden related to the business. That means that manning the expenses and paying for capital expenditures isn’t solely up to you. While it’s not exactly cost-saving for the business, having a business partner could mean leaving more money in your pocket.

* Wider range of opportunities:

When you’re operating a business solo, your time is pretty limited. You’re restricted with the number of projects and clients you can take on simply because there is only one of you and a lot to do. Adding even just one partner can help you figuratively add hours to your day and allow you to take on more business where you couldn’t otherwise. Your team becomes more productive when you have more owners on board, which means you ultimately have the freedom to pursue more opportunities and bring in more money. Not only that, but partnerships can bring on additional opportunities that you might never have access to on your own. Your partner presumably has a contact book that differs from your own, which means that they might give the business access to different prospective clients and jobs that could bring on serious growth. Forming a partnership strategically with someone who has access to industries and companies that your business could serve well can be a great way to grow your brand and your revenue.

* Shared Responsibility:

Partners can share the responsibility of the running of the business. This will allow them to make the most of their abilities. Rather than splitting the management and taking an equal share of each business task, they might well split the work according to their skills. So if one partner is good with figures, they might deal with the book keeping and accounts, while the other partner might have a flare for sales and therefore be the main sales person for the business.

* Ease of Formation:

Formation of partnership is an easy affair. What is required is just an agreement of partnership among two or more persons; which may ever be an oral agreement. No registration of partnership is required by Law.

* Balanced Decision-Making:

Partnership not only pools resources; it also combines the abilities and wisdom of a large number of persons. As such, in partnership the managerial decision-making tends to be sound and balanced, which ensures more of success of partnership business.

* Secrecy of Business Affairs Maintained:

In partnership, the secrecy of business affairs could be easily maintained; since all partners have common interest in maintaining secrecy of business affairs. In fact, in partnership all partners swim and sink together.

* Moral Support

Everyone needs to be able to bounce off ideas or debrief on important issues. And we may need moral support when we encounter setbacks or have to cope with work and everyday frustrations. At other times, it’s simply the need to celebrate after having achieved a goal, or even the need to vent from time to time. Avenues for doing this may not be so readily available to a solopreneur or a small-business owner. Running a business on your own can be lonely. A trusted partner can be a valued business companion.

To sum up, there are many advantages of partnership business in comparison to sole-proprietorship business. We have discussed some of the key advantages in this article. In next part I will throw some light on the disadvantages of partnership business as we all know that every picture has two sides!

Published in The Daily National Courier, January, 06 2023

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