We are in March 2023 already! It marks an end to the first quarter of this new decade, and as we enter the next quarter, businesses are hustling to grow. One of the most effective ways to create a faster impact is through shared efforts. And, this is where the business partnership comes to play. Be it partnering with other companies, leveraging departmental synergies, or starting a new partnership business to give shared expertise a fillip.
The common goal should be to increase the customer base by catering to larger demographics that allow adding more value to the business. There are many ways by which two or more existing business norms can share their benefits of reach –
– By marketing collaboration like Uber and Spotify
– By blending cross-functional professional expertise
– Legally opening up a new venture for new business.
Here’s how you scale up your partnership businesses in 2023.
Setting Expectations Right
You will first need to feel discomfort to make things comfortable. A partnership is not easy as it involves things like a difference of opinions, getting departmental roles, and making bold decisions (sometimes, even if you disapprove) for the growth. Many entrepreneurs find it hard to collaborate and stay loyal to their beliefs that create issues.
Therefore, beginning with setting the right expectations for your small business is vital to growth. Sit down and know what the other person is looking to get out of this partnership? If the expectations do not have shared benefits then there is no point investing time and money. You can only find that out by getting clarity. And for that, you need to spell things out loud. You can also choose to document that for clarity in the future.
Most partners commit this mistake of presuming the other partner’s position without discussing the issue. It leads to a set of unavoidable repercussions. Do not do that. Instead, ask questions that matter and foresee potential conflict areas.
Choose Partnership Business Structure Wisely
The legal structure of a partnership business defines crucial growth-centric decisions. Most of the business functions are governed by legal structures that require it to follow a different set of compliances. Your tax liabilities and personal liabilities are also affected by the legal partnership business structure.
There are two legal partnership business structures in India –
– Partnership Firm Registration
Registering a partnership firm does not require any legal process of documentation once two or more persons agree to run a business. Many businesses carry out a partnership deed where all the partners share equal risks and responsibilities. Those who opt for this structure look to leverage the blended expertise and capital to achieve business goals. The partnership deed works as a legal base of the business structure as defined in the Partnership Act, 1932.
– Limited liability partnership
Getting your LLP registration in India for running a partnership business offer is an attractive way. It restricts the liability of partners in the business wherein a contractual relationship is limited only to the business and thereby mitigating personal risk. An LLP in India enjoys a separate legal existence based on the LLP Act, 2008, whereby partners can assign a ‘designated member’ to perform day-to-day operations. With predefined roles and responsibilities amongst partners, the business tends to run more smoothly than a mere partnership registration.
There’s no growth without honesty and transparency
Not every partnership business can guarantee a long-lasting success. The key requirements of a strong fruitful partnership growth are honesty and transparency. And this has to come from both the partners in equal proportions. It requires a partner to carry out open communications frequently on both the fronts – personal and professional.
Being transparent will help partners to know each other’s strengths and weaknesses upfront. It helps to determine what your business can achieve through the cumulated expertise of the partners and fill in any gaps that exist. Such a relationship evolves camaraderie where everyone learns from each other’s mistakes and failures – this enables the firm to capitalize on any growth opportunity.
Making uprightness and openness a part of day-to-day business life is essential for a successful partnership. Even when you look to partner with other running businesses, it is best to discuss things openly and upfront with prospective partners. Building a good relationship naturally translates to a fruitful partnership that drives business growth.
Legal Documents for Business Protection
Your business growth is defined by how partners participate in doing the business and which activities demand their inputs. A partnership agreement is necessary to ensure business protection against unforeseen consequences.
Most often, the percentage of investments defines the profit-sharing in partnership business or partners opt for a 50-50 split in case of the same investments. Partners usually prefer to stand shoulder-to-shoulder, meaning, both possess an equal share in the business and not treating the other partner with lesser share as less important.
Small partnership business can also start with a generic partnership registration and then scale up by signing the LLP agreement. It requires equal efforts from all the on board partners to think through each decision and share their perspective before taking any decision. Follow these above-mentioned tips to drive growth in a partnership business. It will enable you to start from a position of strength and cultivate a culture of mutual trust and harmony that helps to scale up your company.