Today we are going to discuss the role of partnership in entrepreneurship.
Entrepreneurship is not only risking your financial resources in order to build a business to get enough profit but is a process of building strong connections and establishing a new business using your business relationships. To make this dream come true, the partnership comes here.
Partnership in Entrepreneurship:
The definition of partnership clears the concept of why partnership in entrepreneurship is important. If you are an entrepreneur then you can still use partnerships that will help you build resources, get financial support, and make strong connections.
In this process, two or more parties will own and run a company by sharing benefits and losses equally or in a way where they are committed.
To save your time and to share the most important points of this conversation, take a look at the below points which are the moral of this article:
- The partnership helps to build resources in order to start a successful business.
- Low-Risk Rate: When are you in a partnership then you have a half or less risk rate in the business.
- Increased Commitment: Partnership will help you to stay motivated and connected to your business which will help you to keep running your business even if you are hopeless.
I will explain more benefits in this article. But before moving ahead, let’s start explaining the basic types of partnerships.
Types of Partnership in Entrepreneurship:
Partnership is not only a single term in business. It comes in a variety of different ways and methods. In the case of entrepreneurship, here comes three main types of partnership in entrepreneurship which are:
- General Partnership
- Limited Partnership
- Limited Liability Partnership (LLP)
General Partnership:
The General Partnership refers to an equal partnership in which both parties have the same rights, authorities, and debts to pay.
Partner entrepreneurs have complete rights over their businesses. Each individual has equal responsibilities for work and equal rights to profit and loss in business.
Each partner is considered a co-owner.
Limited Partnership:
In a limited partnership, both partners have different roles. One is the owner of the business and the other is considered a limited partner.
They are known as limited because they are investing in your business for a limited time.
They don’t have the right to your business management and responsibility for debts. They just invest in your business and get some part of the profit from the business in return.
The owner is considered a general partner who is responsible for business debts and up and downs while the limited partners give you financial or resource support and get some profit in return.
Limited Liability Partnership:
Limited Liability is similar to a limited partnership but there is a little difference between both. In LLP, owners are the general partners, and the limited liability partners have the same position for loss and profit but they are not responsible for any debt.
They only have the profit and floss on the behalf of the money that they have invested. It is very common in professional services like banks, law firms, etc.
If you are a business owner then you have to carefully look at your business position to determine which type of partnership is good for an entrepreneur.
Benefits of Partnership in Entrepreneurship
There are a lot of benefits plus disadvantages of the partnership in entrepreneurship if you are an entrepreneur.
As an entrepreneur, it is important to know that there is a huge risk and huge profit change in your business. After taking a look at your business position, you have to choose the right partnership type for your business.
Now, when you have chosen the right partner, then you will start receiving these benefits:
Shared Risk:
Risk is part of every business and for an entrepreneur like you, it is a common part of business life.
In order to decrease the chance of risk and to manage the loss if something wrong happens, you need a general partner which will help in sharing the loss.
This will ultimately reduce the financial burden on your mind.
Shared Experience:
If you are starting a low-level business with fewer resources then the general partnership is best for you.
After selecting this partnership, the next benefit you will receive is a shared experience.
You will both have the same authority, rights, benefits, and loss of the business which will ultimately build the experience of both parties.
If you are starting a business for the first time in your life then you can take a part in a startup business for a shared experience.
Decreased Work Burden:
For a single entrepreneur, it becomes difficult to manage the whole business workload. The partnership gives you the facility to share your workload with your partners to manage your business and manage the work follow without any disturbance.
Good Decision-Making:
When you work as a team or partners in any business, you get a bunch of different ideas and opportunities to apply to your business. If any problem comes along the journey, your partners will give different statements which will help you to make a good decision.
Increased Resources and Growth Opportunities:
Business is not the work of a single person. When you want to grow your business and take it to the next level then you have to make strong connections by meeting different people from different backgrounds and fields.
In the partnership, you can use the resources and opportunities of your partners to increase your business productivity. It will help you to make strong and beneficial connections.
These are the 5 most common benefits that you will receive as an entrepreneur in partnership.
Closing Thoughts:
A partnership can be very helpful for you as an entrepreneur. Although there are some disadvantages of partnership in entrepreneurship, the advantages are more than that. If you want temporary partners without giving them business authority then you can try a limited liability partnership.
Running a business with partners is a good idea if you are a great leader and know how to deal with a team in the business.
