The More the Merrier. This saying may be true in most of the cases, but is it also true when it comes to business partnerships? The first question that comes to mind is whether the partnership will work or not. Even if you manage to find someone who shares the same thoughts and ideas as you, there is no guarantee that the partnership will work in the long run. The most important question to ask here is whether a business partnership is a right way to grow your business. Let’s try to find out.
Business partnership and its types
A business partnership can be defined as ‘a contract between two or more persons sharing a single business with the common goal of profit.’ Each partner of the company is liable to contribute to all business aspects of money, efforts, skill, and property. At the same time, each partner is liable to share in the losses and profits of the business entity.
There are three basic types of business partnerships in trend.
Here we describe three type of business partnership with their features, to help you to decide which type of partnership suit your business.
Where a dealer takes the responsibility to promote your products and generate leads, of course, in return to a commission based profit mechanism.
These are the ones who will increase the popularity of your products/services in the target market and send potential customers to your website.
Social good partnership:
Business partnerships are most beneficial for the startups and small companies that do not usually have the sufficient resources and/or time to implement an idea or product effectively. A partnership is definitely a way to grow your business, but it has its own complications. First, it is not often easy to find the perfect match to become your partner. And even if you manage to find someone like that, you’ll have to define the partnership goals and various practical matters to ensure growth.
You seek out for a partner in one of the following cases:
- When you are no longer able to continue to business alone
- You are looking for an easy investment option
- You need someone who has the knowledge that you do not possess but need to succeed, like your other-half, knowledge-wise.
- You see an opportunity to grow your own brand by partnering with an already reputed company.
- You can make quick money by becoming a dealer/distributor for a brand.
- You need resources that are either too costly or impractical but essential for the growth of your business.
Benefits of Business Partnerships
If you are still not sure whether a business partnership is a good choice for your business right now, read here about the major advantages of partnerships to get a better grip on the subject.
The main motive of most of the business partnerships is to arrange easy and fast money. Of course, it has its conditions like sharing of profits and ownership, but a partnership is the best option when you are in desperate need of resources and/or budget.
Access to new audiences:
It usually takes years for businesses to build a regular audience-base, which you can get for free by partnering with an existing company. It is important that the other company deals in the same industry as yours so that you can use their audiences to market your products as well.
Promotional or distribution based partnerships are the best when you are looking for fast ways to market your goods. Since you are being paid a commission for every sale or you are paying the profit commission to your business partners, it will eventually result in more sales and better reach of business products.
As a new brand, you may not have a reputation in the market. By associating your name with an existing brand, you can build contacts, customers, and trust that are the basics to grow in any industry. As a business partner of a good company, you can use their reputation to grow your own.
Apart from money partners, you can also make skill partners who will bring the necessary skills and knowledge to your business. You cannot possibly know everything, no matter how much you desire. A partnership is the best way to fill the knowledge gap without having to recruit paid workers.
Effects of Partnerships on the Growth of Business
The ultimate aim of a business partnership is to improve the growth rate of the business.
Once you find the right partner and decide to build a business partnership, you will have to define common business goals that you both want to achieve. This is the only way to ensure a definite growth for your business. Make sure that your business goals are in symmetry, at least for the term of the partnership. It is also important to clearly define the profit scenario, depending on the type of partnership you are constituting. There must also be an exit strategy where one of the partners can leave the company under certain conditions and by fulfilling some duties.
Only a properly formed business partnership can prove beneficial for all the involved parties. A partnership is definitely the right way to grow your business. It is like seeking help when you are not able to do something yourself, alone.
In the end, it is your choice whether you really need a business partner to grow your business or not. If you are concerned about the success of partnerships, don’t be. There are many big brands that are results of solid partnerships. SAG Infotech is one such example of this type of business model. You can also be a part of this great endeavor of SAG Infotech by joining hands with us for our latest GST App and Software, and by becoming partner under these programs.