The evolving business landscape requires navigating the ever-changing currents of these difficult times. Businesses are always facing challenges and it’s up to them how they change the outcome. Partnerships yield many benefits to such difficulties, such as coming up with the best possible solutions. 

When two organizations come together, amazing things happen. These results don’t just happen; both parties must deliberate to get them. Everyone benefits from a deliberate, well-thought-out arrangement, particularly when large expenditures are at play.

The true identity of a successful business shines from its ability to sustain strong relationships. Marketers are aware of the exposure and benefit that comes from partnerships. Bringing in a consultant or partner during times of need can enhance the workflow and overall well-being of your company. 

In this article, we’ll be exploring how majority of the businesses depend upon partnerships. 

Comprehending Businesses Partnerships

A business partnership is a type of legal arrangement wherein two or more people or businesses enter into a written agreement. It is a shared investment between two parties who benefit from the gains and sustain parts of the losses from the company. Any decisions made by the company are initially discussed and favored by the partners first, before proceeding. 

  • General vs Limited Partnerships

General Partnerships are formed when more than one individual comes together and shares all the aspects of a business including assets, liabilities, and profits. In a general partnership, each partner consents to limitless liability. This implies that all partners’ assets are equally at risk of being used to settle any debts or liabilities the company may have, should it encounter any legal or financial difficulties.  

A general partnership also has all partners overseeing every aspect of the daily operations of the company. All the partners are equally involved and make important decisions together with the consent of all the parties present. 

Another kind of commercial partnership that needs two or more partners is a limited partnership, or LP as it is sometimes called. However, limited partners do not participate in day-to-day operations as general partners do, where all partners have an equal say in how the organization is operated. 

 

In addition, the liability of a limited partner is restricted to the amount of money they invested in the company. The business’s general partner will be subject to limitless responsibility. The limited partner is not in charge of making business decisions, and if they do, their liability may increase.

The Success Rate of Partnerships

Partnerships boosting the structure of an organization do clarify its instant popularity of it. However, to fully comprehend its efficacy, success rates must also be taken into account.

The Harvard Business Review states that the success rate of a business through partnerships is quite high compared to solo ventures.  According to the study, organizations with two founders had a 30% higher likelihood of a successful exit (such as an IPO or purchase) and were 19% less likely to scale prematurely than solo ventures. 

The best way to know whether partnerships are fruitful to the company is through its ability to increase brand revenue. We can take Microsoft’s example; it is noted that 95% of Microsoft’s commercial revenue is generated through its partner ecosystem. When it comes to Zoom, its channel partners were part of 70% of its business carried out in Japan.  All these statistics prove that partnerships can be the reason for a company’s success.

Advantages of partnerships

  • Complementary Skills

Partnerships provide you with a different skill set that you can take complete advantage of. You can be exposed to many other businesses allowing for other ideas to take root and be used in a business setting. When two or more individuals get together to make crucial business decisions, each person brings something new and innovative to the table. This way the company eventually makes informed decisions which in turn makes it a more productive and efficient organization. 

  • High financial resources

Investments are the best way you can boost a business. It is extremely important to have a pool of resources at your disposal. They will help you market your company well and when the demand increases, it’s easier to manufacture the goods. The business will start expanding and you’ll eventually have a lot of revenue coming in. 

  • Networking Opportunities

When there is more than one partner involved, each partner has many networks that your business can benefit from. These networks will help you reach your goal within months. Networking provides many business opportunities that will assist you in expanding your business. Avail such opportunities to gain more revenue.

  • Sharing responsibilities

When you’re running a business, it becomes hard to manage all the responsibilities. This is the reason why many solo ventures run their course after being launched for a brief time. Partnerships allow you take have shared responsibilities that each of you can handle. The workload gets distributed allowing individual founders to take a breather from the burden of running a business alone. 

  • Transferring Taxes

Partnerships transfer the cost of taxes to their partners rather than being taxed as separate legal entities. This implies that the tax on your revenues is based on your individual earnings tax rate. By not owning a corporation, you are spared the additional taxation that results from the business paying taxes and you pay taxes on your dividends. There may be additional tax advantages available to partnerships that run LLCs.

Conclusion

Every relationship grows stronger built on trust. The same goes for business partnerships as well. One must avail this opportunity and carry it out to the best of their abilities. There might be some downsides to partnerships but only when they aren’t done right. The benefits outweigh the disadvantages by a very high percentage. With the help of many recent studies, we were able to get an idea regarding the percentage of successful businesses that are partnerships. 

If you are being approached for a business partnership, take on the opportunity and build a successful business!

God bless

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