Starting a business without partners can be a little difficult and overwhelming. A strong partnership can propel your business to the next level. This partnership is beyond any LinkedIn network or any personal connection. It is established after taking tons of decisions and searching for the right partner who could share the same vision as yours.
What is a partnership?
A partnership is an organization having two or more business owners. Each partner shares the profits and losses as discussed in their contracts and is responsible for numerous duties and decisions to be taken care of. A ‘strategic partnership’ can help you to take your business to a higher level.
Before finding out how to build a strong partnership to grow your startup, let’s discover the benefit of partnership in your firm.
THE 7-STEP STARTUP SUCCESS FORMULA
I am not the only Business Coach around. There are many distinguished business coaches and gurus out there. At the end of the day, our aim is not just to give you knowledge and jargon.
In this book, I have mentioned 7 defined steps to reach your startup milestone, condensed with my 25 years of experience.
___ by Anu Khanchandani
How Partnership Can Grow Your Business?
As the saying goes, “Two heads or more than two is better than one.” This implies that a strategic partnership is better than running a business as a sole proprietorship in many ways. They can have your back during uncertainties or in times of need.
A few benefits of partnership are mentioned below:
- Business partners can attract new business by 2X.
- You will be able to take on higher projects with great returns.
- The partnership allows having extra brain power in the planning or decision-making process.
- One can learn new skills with each other as a transfer of knowledge and expertise.
- Together can build strong management skills
- Effective communication line will be established between management and the employees by delegating the duties of the partners
- Practical relationships to spread influence among investors, clients, or customers.
To avail of all these opportunities, you need to build a reliable partnership by finding the right partner. You can find them through your social or personal connection or with your mentor by carefully interviewing their skills and personality.
After finding the right business partner, you have to follow a few steps which will help you in establishing a strong partnership. These steps will make your work easy and avoid any future disputes that may occur internally.
7 Steps to build a strong partnership
Some important steps need to be taken care of while building a partnership as it gives clarity. These steps are helpful at the initial stage and during the growth phase of your company. Follow them to achieve success and establish your brand in the industry.
1. Decide on a partner’s contribution, shares, and responsibilities
Once you have decided to form a partnership with your partner, you have to take decisions on certain aspects to ensure a better understanding.
Whenever any partnership is formed, partners have to contribute a specific amount as an investment to the business. This amount should be decided with mutual understanding along with the number of shares each partner will have. Shares signify the profit or loss a company will make in the future.
Shares also show the ownership of a partner in the company. It should be divided as per their responsibilities and contributions made. The responsibilities of each partner should be clear to avoid any confusion. Partners should look after the duties as per their expertise in particular areas.
2. Determine partnership type
There are several types of partnership that an organization should consider according to its size.
- General Partnership– It is the most basic form of partnership that does not require the involvement of the state. Ownership, profit, and liabilities are distributed with mutual concern.
- Limited Partnership– This type of partnership requires authorization from the state. In this one, there is one general partner who is fully responsible for the business and one or more limited partners who will invest in the company but do not take part in its day-to-day activities.
- Limited Liability Partnership– This is similar to a “General Partnership” where all partners will actively manage the business but don’t take liability regarding other partners’ errors or mistakes made in the business.
Check your business requirements and decide which type of partnership is best suited to your company.
3. Create a partnership agreement
After deciding the type of partnership, a partnership agreement is required to bind the partners in a form of a contract. In this contract, responsibilities, profits, liabilities, and contributions are mentioned.
All types of concerns, terms, and conditions are written three to avoid any future confusion among the partners. It also shows the legality of this partnership process.
4. Take care of registrations and licenses
The next step would be to get registered on the government portal and apply for the necessary licenses needed for your company. Registration can be in the form of domestic or foreign as per the location of your firms. You have to get a license from the tax authority, for your company’s vehicle and building. All the legal formalities should be done with your partners.
Click here to read: 10 basic laws every startup founder should know
5. Share the same values and vision
A partnership will only work for the long run if you all share common values and align them with the vision of the company. This shared vision helps in attaining long-term goals with mutual understanding. Partners will act as a backbone to each other and maintain trust for the benefit of the company.
6. Strategic planning
Proper planning with alternative plans is essential to running a business. The partnership provides various benefits such as large investment, skills, and expertise that can be leveraged in creating a strategic plan. A solid implementation is required to test the practicality and success rate of these plans.
Partners contribute to forming business plans with their level of expertise and involvement in a business.
7. Communicate regularly on the progress and shortcomings
One of the most crucial aspects among partners is the communication line. The effectiveness of such a partnership will ensure positive results only if partners can communicate regularly and share their concerns and next step. Each partner should track the progress of each other and motivates one another.
If the communication is strong then there will be fewer threats from outsiders, and partners will be able to dissolve any kind of shortcomings.
Partnerships between Apple and MasterCard, BMW and Louis Vuitton, or Uber and Spotify are examples of successful partnerships that took place in the market and are thriving with the support of each other.
Partnerships help a business to grow and thrive by eliminating problems and sharing the best ideas on any project. Build a strong partnership with the above-mentioned ways and increase your business’s productivity and revenues.
“A strong team can take any crazy vision and turn it into reality.” -John Carmack