Ten steps there are to building a profitable partnership

building a profitable partnership

Let’s see what ten steps there are to building a profitable partnership:

Step one: Making the decision

Know and understand your business and what your needs are?

Research, identify and evaluate potential partners on their passion, financial stability, values, proven track record in your field, proven track record on up-to-date technologies, reputation, authority, governance, reliability, experience, credibility, humanity and principals.

Decide each of their potentials, strengths and known weaknesses.

Pick the best matching partner available after fairly interviewing and vetting them all within preset criteria.

Decide on the type of partners, share allocations and each of their contributions.

Then decide on the type of partnership.

Step two: Give the partnership a name.

Step three: Outline your objectives, mission, vision, core values and strategic plan.

Step four: Establish your communication channel.

Step five: Find a location for your business.

Step six: Prepare your legal documents.

Have strong institutional commitments.

Have strong relationship management.

Step seven: Prepare a partnership agreement.

Have clear roles and responsibilities.

Have a clear managerial and decision-making structure.

Step eight: Register your partnership with the registrar of companies.

Step nine: Process your business permit and licenses.

Step ten: Evaluate and continuously assess the success of your partnership and make improvements.

Partnerships are relatively easy to establish, organize, register and run as compared to companies. This is why people prefer building partnerships. People prefer building partnerships also because:

Each partner files his/ her personal income tax returns based on profits/ losses earned from the business and therefore the partnership business does not have to pay income tax.

Partnerships are less regulated by law as compared to companies.

Since there is no influence by shareholders, partnerships are easier to manage.

The business is well managed since it has more than one owner.

Partners share functions, tasks, duties and the responsibility of running the business.

Partners can collectively raise funds required to start, grow and expand the business; the more the partners the more the capital provided for growth and business flexibility. Business can easily adopt new technology and hire the best human resource in the market.

The business benefits from new ideas, problem solving skills and the diverse skills brought in by the partners.

Functions, tasks, duties and the responsibility of running the business can be divided amongst the partners depending on abilities and skills possessed by each partner.

A limited partner is only liable for the amount of capital contributed in the business.

A creditor cannot go after assets held by a limited partner.

Since limited partners have limited liability to the business debts; it is easy to attract investors and credit.

Limited partners share in the business profits and losses even though they do not participate in the running of the business.

Profits and losses are shared according to set agreements.

With the mutual consent of all partners; partnerships can be dissolved.

Cheers,

Peter Kirimi Mburugu.

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