Becoming more profitable

Business partnerships: a formula for success

The power of two minds is better than one, and building a business can be more rewarding and profitable in a partnership environment. If you’re able to go into business with someone that complements your skill set and adds value to your company, you’re more likely to be successful and create a viable, profitable, and long-lasting business.

The advantages of partnerships in business 

Partnerships have helped take some of today's wealthiest business people from a small business to multi-million dollar corporations. No matter what size your business is, you too could achieve greater rewards from forming a winning business partnership. In fact, business partnerships can be the most unique and trying relationships you’ll ever enter. Some work monumentally, but many fail. 

A major issue can be equality and the financial contribution made to the success of the business. Normally, if there is an issue, you’ll find one partner is disgruntled with the other due to effort or investment.

There are many ingredients that go into creating a successful business, and it’s important to know these if you want to succeed in creating a valuable partnership.

Establishing a business partnership 

There should be formal understanding about:

  • amount of equity invested by each partner or investor
  • type of business
  • how profits and loss will be shared
  • partners' pay and compensation
  • distribution of assets on dissolution
  • provisions for changes or dissolving the agreement
  • dispute settlement clause
  • settlement in case of death or incapacitation
  • restrictions of authority and expenditures
  • length of relationship or agreement. 

Share responsibility equally. Aim for each partner to take on a defined role and seek general agreement on the business plan, goals, and visions from the outset. 

Clearly define who’s responsible for what across every aspect of the organisation, and put KPIs and measurements in place to record successes and failures. This is important from a reporting viewpoint and to ensure roles aren’t being duplicated.

Some work monumentally, but many fail.

Leveraging the benefits of business partnerships 

It’s very difficult to build a large business on your own. There’s a limit to what you’re capable of doing on your own, considering the range of skills and experience required. 

Having partners share the responsibility of running the business allows them to make the most of their individual abilities and experience. This can be highly beneficial for business growth.

Partners can invest more money into the business, which enables flexibility and more potential for growth. It also means more profit, which is equally shared between the partners. Partners share decision making and can help each other out when needed. More brainpower encourages innovative business ideas and is better able to solve problems. 

Taking on a partner can lighten the workload, lessen your financial burdens, and improve the overall quality of your products, services and reputation.

The bottom line is some businesses can achieve huge success easier together than separately. If you want to create a long term, successful and sustainable business that has real potential, then partnering is definitely worth consideration.

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Michael Derin

Founding Partner and Chairman, The Azure Group

Michael has over 28 years experience as a qualified Chartered Accountant within the business and commercial sectors. Michael works across our Technology, Corporate Advisory and CFO operations, managing highly complex projects to success.

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