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Partnership In Small Business

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 The partnership seems to me can be attributed to one of the most complex forms of organizing entrepreneurial activity. Moreover, both at the managerial and legislative levels. It is unlikely that anyone will dare to challenge the claim that if you have bad partners or you are a bad partner then your joint partnership is doomed to failure. And often, even a partnership created on the basis of two successful businesses. Crashes after a fairly short time of its existence. 

    What Types Of Partnership Are In Small Business

       At the organization level, a partnership can be of two types. The first is a registered form of partnership organization with the participation of two or more individuals or legal entities. First of all, such a partnership is typical for people and businesses that are engaged in joint economic activities. For example, affiliate business, partnership in the relations of several businesses, etc.

     The second type is the cooperation of legal entities or individuals, which is not fixed in legal documents, but actually exists and is supported. For example, partnerships between a business and its suppliers or consumers, etc.

     According to the form of organization, a partnership can be of several types:  

     1) Commercial Partnership

 This is a partnership organization that is commercial in nature and is aimed at making a profit. This form of organization is inherent in most of all partner businesses in the world. As I already wrote, other definitions, for example, companionship, are more suitable for such a partnership.

  2) Full Partnership

   It is a partnership in which partners bear equal responsibility, which may be joint or several.

 3) Limited Partnership

 It is a partnership in which each partner has a limited, pre-agreed responsibility.

  Partnership With Your Employees

   This topic has become very fashionable lately. And I want to express my opinion about this.

     In any business, is to make his employees treat his business as their own. How to achieve this?

     There are quite a few theoreticians who believe that by declaring the slogan “ we are all partners” in business, you can create a kind of business commune in which everyone will put all his opportunities into a common cause and receive his own contribution. Those. They suggest turning business into a kind of modernized semblance of a utopian socialist enterprise.

     In such a business, everything should be transparent – all employees must know the salary of all employees which is calculated as a percentage of the total amount allocated to the salary. All employees must know and be able to evaluate the contribution of each employee to the common cause.

     I see only one way of a partnership with my employees, which I have tested and which benefits both the business owner and his employee. This is the creation of an employee of his small business, separated from the main and, then, partnerships between businesses.

     I will give an example from my own practice. To deliver products to consumers, I had to keep a truck with a driver in the factory. Naturally, the truck required constant maintenance, and the driver did not really care about fuel economy, did not really care about the car itself, and it was very difficult to trace the use of its time.

     And I made a decision and offered the driver to buy a car from me in installments and open my transportation business. He agreed and we became partners. I was not bothered by fuel consumption, vehicle condition, or driver’s working hours. On the contrary, he himself was now rushing the workers to load it faster.

 Hierarchy In Partnership

 In a small business, this issue is very relevant. Indeed, in small businesses, in contrast to large businesses, hierarchical management structures rarely exist. Managers in small businesses are most often its owners. Therefore, in small businesses, two options for partnerships can be distinguished.

     The first option is an equal partnership. Two or more partners have equal shares in the joint business. They either invest equal funds in creating a business or find equivalents to invested funds – this is not the point now. The main thing is that their role in business is equivalent. And in this equality very serious problems may lie. And the main one, that such a partnership can resemble famous fable, when the swan, cancer, and pike will pull the business in different directions. Of course, it is clear what awaits such a small business.

     The second option is an unequal partnership. In such a partnership, the shares of partners in the business are not the same. One of the partners owns a larger share of the business, for example, 60%, and the second smaller – 40%. In this case, a partner with a larger share of the business (let’s call him a senior partner) has more power in the business. And his right to vote in various situations is crucial.

     And the greater the difference in the shares of the business, the more power the senior partner has. In some countries, this is even enshrined in law. And a partner with a small share in the business – for example, less than a certain percentage – may not have the right to sign in the documents of the business.

    The junior partner in this case has an almost advisory voice, and his position largely depends on the main partner. Such partnerships are especially characteristic of businesses created with the organization’s form of an LLC.


     In conclusion, I want to warn about the perversity of a very common type of partnership. This is a forced partnership. Very often I hear from businessmen, especially failed ones, the phrase “I had to take a partner because of ….”. And any reason is called, most often the lack of funds. A forced partnership is almost always a death sentence for an unborn business and very rarely brings luck.



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