To boost your business presence in this competitive world, you will need a shoulder to lean on. Therefore, a business partnership is what you need to enhance the growth of your operation. The partnership manifests itself in a variety of ways, ranging from co-operating business owners to invest in a project to share technical knowledge and ideas between companies.
In this article, we will discover the reasons why having a business partnership can significantly impact your business.
What is a business partnership?
A business partnership is an agreement between two or more parties to work and grow together. The partners invest their money in the business, and each partner will benefit from any gains and sustains part of any losses.
Types of business partnerships
There are 3 different types of business partnerships that are usually set up.
General partnership (GP)
A general partnership consists of partners that participate in the everyday operations of the partnership and have liability as owners for debts and lawsuits. GPs don’t require formal agreements or state registration so they are the easiest partnership to start with. GPs offer tax flexibility. Nevertheless, since they don’t offer personal liability protection, you are responsible for your partners’ actions while your own assets may be at risk.
Limited partnership (LP)
This type of partnership consists of two or more partners, with at least one general partner and one limited partner. The general one has control over business decisions and is responsible for the whole business. On the contrary, the limited partner doesn’t make any business decisions and is not personally liable. Also, there is some tax flexibility with LPs.
Limited liability partnership (LLP)
LLP is a formal agreement by two or more partners in the same professional category. Owners of an LLP are protected from their partners’ actions. They won’t be the ones that take responsibility if a lawsuit is filed against the business. LLPs come with management and partnership flexibility.
Example of a successful business partnership
A great example of this is the partnership between the Chinese e-commerce monolith Alibaba and high-end fashion brand Valentino. Together they have come up with a technological idea of launching a one-of-a-kind project: a 3D pop-up store in Beijing. The purpose of the pop-up is to promote Valentino’s Garavani Candystud product line as well as Tmall’s Luxury Pavilion - a loyalty program for high-end customers. With the pop-up shop, both brands have exposed shoppers to a new way of shopping that bridges the gap between the online and offline customer experience.
5 reasons why you would need a business partnership
Access to knowledge
Companies need a wealth of knowledge which comes in bounty with strategic partnership agreements. A business partnership allows you to grow and learn from each other’s perspectives. At the end of the day, all of this would be used to further grow your business in the future.
Access to capital
One of the most obvious benefits of having a business partner is finance splitting. Starting and running a business is a costly venture, and when the financial responsibilities are shared with another individual, you are at a greater advantage of getting your business off the ground. Eventually, this will increase financial security and cash flow while lowering the stress of funding your operation.
Enhance business credibility & image
The right business partnership can help enhance the ethos of your operation. When companies that share the same goals and vision join together, the influence and strength of each can grow remarkably. A stronger business is capable of providing better goods and services and increasing brand equity.
Most business partnerships are taxed as pass-through entities. As a result, you will file and pay taxes on your share of business ownership. Doing this helps lessen the burden of having to pay taxes for the entire business on your own.
Setting up a business partnership with someone who has a different set of strengths than you is an ideal way to ensure that all fundamental aspects of your business are covered. A savvy entrepreneur would figure out what their strengths are and find other people to fill in the gaps.
To sum up
It takes a lot of work and time to find the right person and form a beneficial partnership. However, by opening yourself up to the potential of business partnerships, you might not only find a valuable business ally but also the ones that help you with the ups and downs of your business.
ConnectPOS, a leading POS solution in the market, is open to any partnership that’s looking for a win-win deal. With 100+ partners around the world, we offer doubled value for our precious customers. So why don’t become our partner and earn an impressive revenue share right now? Contact us today for more details!