A business partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the firm.
In a Partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. However one thing a partnership needs is an openness and trust between the partners. Without this in place the partnership is doomed to failure.
It is important that all of the Partners should have a written legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved. As to future partners and how they will be admitted to the partnership, and how partners can be bought out, or what steps will be taken to dissolve the partnership when needed.
Maybe it’s hard to think about dissolving a business when it is just getting started, but many partnerships split up at crisis times and unless there is a defined process, there will be even greater problems. They also must decide up front how much time and capital each will contribute, etc.
A partnership is like a ship setting out to sail around the world, where it will face all sorts of danger and rough weather. It will need the trust and team spirit, of all concerned for it to arrive safely at its destination.
Advantages of a Partnership
• Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement.
• With more than one owner, the ability to raise funds may be increased.
• The profits from the business flow directly through to the partners' personal tax returns.
• Prospective employees may be attracted to the business if given the incentive to become a partner.
• The business usually will benefit from partners who have complementary skills.
Disadvantages of a Partnership
• Partners are jointly and individually liable for the actions of the other partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements can occur.
• Some employee benefits are not deductible from business income on tax returns.
• The partnership may have a limited life; it may end upon the withdrawal or death of a partner.
Do you know why business planning is the most important factor determining business success?
If you are already familiar with business planning then you will already realize the importance of having a continuous evolving plan for your business. If not then we will discuss the benefits to you and your business of having such a plan in motion.
1. A good business plan regularly updated will give you a reality check on the performance of your business. Seeing figures in black and white can stir you into taking action by remindingyou what you had originally planned.
2. Good planning will take in the concept of continual research into making your business more profitable and more efficient. A continually updated business plan is like focusing on the different programs on a television screen, which are continually changing. So eventually you get a better idea of what is actually happening inside the structure of your business.
3. With a business plan you have to learn and become proficient in the many different aspects of the structure of your business. By the nature of your involvement in your business plan if you ever need expert advice on any part of your business then you will already be familiar with its workings.
4. Many people who run a business do not like focusing on many of the parts that go to make a business plan a success. This is a false way of having the finger on the pulse of your business. By being involved and familiar in the planning of your business you literally have to take part.
5. The contacts and the people you meet while writing and researching your business plan will give you untold opportunities later as contacts to help expand your business. Every contact can be a potential customer.
Do you know where to find the information about your intended customers or target market?
1. It’s probably the most difficult part of your business, trying to figure out where your customers are going to come from, but it is one of the most important. That’s why the supermarkets like Walmart and Tesco always do market research about an area before they even contemplate building a superstore there.
2. Unlike most large companies who employ market research companies you may not be able to afford their costly investment. However all successful businesses need to have a close understanding of potential and existing customers and the marketplace they work in.
3. This understanding allows you to target customers, sell effectively, and compete with other suppliers and spot new opportunities. Performing market research on potential customers and your competitors will help you to gain this vital knowledge.
4. You can build a picture of general trends using published market information - from free government statistics and data to paid-for market reports from commercial providers. Your own contacts and sales records, if you have any, can also be a great resource.
5. You can add to your knowledge by using field research - from surveys and discussions to product tests - to investigate customers' attitudes and examine questions specific to your business.