Advantages and Disadvantages of Business Partnership

It is often impossible to organize a business without involving partners. Sometimes an entrepreneur does not have enough funds of his own, or, conversely, the income obtained requires competent placement. This creates a partnership business, where the owners of a commercial organization are several people at once. But at the same time, it is possible to underline several advantages and disadvantages of partnership. It is no accident that former partners at best become competitors, and at worst the enemies. Therefore, it is better to consider all possible nuances at the stage of establishing relations.

Advantages of Partnership

Any partnership should have advantages first of all. The partnership is often chosen when there is a strict need for it. However, it should be noted that in the process of activity the main directions of development of an organization can significantly change. Therefore, the partnership agreement in business plays a rather important role and is concluded by agreement of both parties who are ready to take part in the partnership.

It should also be said about a number of advantages that partnership has, namely: this is the interface of relations and responsibilities because the form of partnership allows you to bring responsibility closer to the state of things. Also, the official partnership has a significant effect on the level of personal relationships, as it results in a high quality of relations between employees.

In the course of the partnership, the greatest motivation and interest in the results of one's own work and the work of partners is provided. Prospects for the development of the company in partnership also play a very important role. So, having considered the basic forms of business partnership, you can come to certain conclusions and choose for yourself the most acceptable option.

Like individual ownership, the partnership is easily organized. One of the advantages of the partnership is in the fact that bureaucratic delays are minimal, a written agreement is concluded. A large number of participants are possible in the agreement. In this case, a high specialization in management is possible. Financial resources at the expense of participants are richer than in one-person possession. Partners, having united their capital for bankers, appear to be more reliable payers.

A companion can have different skills that will benefit the business. For example, one partner has experience in engineering and research, and the other in marketing and sales. The use of different, complementary skills can lead to a significant increase in productivity and success. In addition, working with a business partner allows you to distribute tasks in accordance with the strengths of entrepreneurs, saving time and eliminating duplication of work.

The owner of the company needs a view from outside to avoid a one-sided, one-sided view of his business. He can believe that he has a brilliant business idea, but the emotional component can often interfere with a sober, objective assessment.

Successful entrepreneurs firmly believe in their idea, but they also recognize that independent opinion from the side is very valuable. The decision-making process can be more easy and simple, when two business partners evaluate the decision, exchange opinions, discuss and develop a single effective solution to the problem.

Sometimes it happens that, having started his business, the entrepreneur gradually becomes sluggish, the motivation and business rhythm of life is lost. For some people, because of their nature, it is difficult to maintain discipline. In the case of the partnership, it is the responsibility of the partner for the effective performance of tasks, results, errors. Thus, there is mutual support in the right tone (by analogy, two newcomers to the gym go together to support each other in motivation and discipline).

Often, businessmen turn out to be too optimistic or pessimistic. Too much emotion interferes with effective work, the development of new projects, etc. A business partner can help to remain emotionally stable and judicious.

Disadvantages of Business Partnership

The partnership, however, has a number of shortcomings. Major disadvantages of partnerships are connected with legislative uncertainty, as well as the complexity of the governance structure.

There may be some problems that are not characteristic of personal possession. If several people participate in the management, the separation of power can lead to incompatibility in views, uncoordinated politics, to inaction, when decisive measures are required.

The duration of the partnership is difficult to predict. The death of one partner or his exit most often entails the disintegration of partnership, disruption of activities.

Responsibility on partners is equivalent. So, if one has made the wrong management decision, the responsibility for the result is divided equally. A successful partner must rely on the prudence of less enterprising participants.

Sometimes even cooperation with a talented, highly motivated, competent business partner can cause problems, such as disagreements in the company's long-term goals, its development strategy, and a common vision for the future of the joint business. This leads to quarrels in the process of making key decisions when everyone defends his position. Disagreements between partners can cause stress, take away resources or provoke dishonest actions. If a business partnership is organized between members of the same family, relatives or even spouses, then disagreements in business can impose an imprint on personal relationships.

Some entrepreneurs find that their partner does not share their enthusiasm and passion for business. Companions, who can not meet the deadlines, satisfy customer requests, fulfill their duties, can lead the firm to bankruptcy. Some partners do not have enough experience or skills to do their job successfully.

It is possible to conclude that deadlock situations arise only when the partnership business is not sufficiently formalized and not supported by documents. Therefore, at the stage of forming a new organization, the entrepreneur should immediately focus on a clear regulation of the rights and obligations of partners.

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