The formation of such a form of business as partnership is due to an attempt to overcome the shortcomings of individual ownership. It is a contractual relationship established between several entrepreneurs with the aim of joint ownership and management of the company. This form of business organization allows each of them to get the desired profit through the exchange of performance results, expressed in material form. Partners combine their abilities in business management and cash management. Thus, risks are distributed, as well as profit and possible losses.
The main forms of partnership
As you participate in a firm, business partnerships may vary. Partners can play an active role in the process of enterprise management, or several participants can invest their material resources, but do not take part in the conduct of business. Cooperation in business can pursue different goals for each of its participants, while distributing the level of responsibility. Partnership forms follow from this:
- A commercial. A membership based organization whose goal is to make a profit.
- Non-profit. In this case, the goal of a nonprofit organization is to assist its members in achieving individual goals (social, cultural, scientific, charitable, etc.).
- Full partnership. Members are jointly and severally liable.
- Limited partnership. Participants have limited liability.
- Strategic. At the same time, one of the partners is more economically significant, that is, more financially powerful, able to provide another company with resources to achieve strategic goals.
Partnership Principles in Business
Relations between people, companies and other financial market participants are constantly increasing the value created for stakeholders. There are a number of principles on the basis of which a business partnership is built:
- Volunteering
- Common goal and interest.
- Interdependence arising from the distribution of risks, income, authority.
- Emergence (the emergence of new properties as a result of joining forces).
- Liabilities and agreement on the share of partners.
- Teamwork.
- Separation of resources and competencies.
- Good communications.
Also very important for effective cooperation is the ethical side of the relationship. It consists in mutual respect and trust of partners.
Benefits of Business Collaboration
Due to its undeniable advantages, business partnership is very much in demand as an economic mechanism. The offer to cooperate is perceived today as an effective way to increase your own profit. Moreover, the partnership is organized by signing a written agreement, without additional bureaucratic red tape.
It provides an opportunity to redistribute various risks, and also has the following advantages:
- Combining the resources of participants provides new opportunities for expanding the business. This not only improves the prospects for the development of the campaign, but also makes the organization less risky for bankers.
- A business partnership provides motivation and interest in achieving high results.
- The affiliate structure of the organization is more attractive to international investors.
- High specialization in management.
- The implementation of communicative exchange.
- Ensuring the competitive advantages of participants and achieving a balance of competitive forces.
Of course, cooperation encourages the creation of a unique business idea. Partnership, therefore, is an aid to innovative sources. The internal potential of the organization is mobilized for the implementation of its own economic goals.
Key Partnership Disadvantages
With all the positive opportunities, a business partnership has certain disadvantages. They are primarily associated with the problem of separation of powers and incompatibility of the views of the participants. Inconsistent policies can result in lasting, negative results for both sides. Also, difficulties may arise in the formation of a business management structure.
Another negative point is the unpredictability of partnerships. Factors such as the death of one of the participants, the exit from the partnership, can lead to the reorganization of the company or its complete collapse.
Choosing a partner for further cooperation
The decision to attract a partner to carry out joint activities is made for various reasons. In any case, it should provide an effective business partnership.
An offer should be made only to market participants who are able to take responsibility and have serious potential.
The partner should be fully involved in all business processes and take an active part in its development. Partnership participants must share a vision for enterprise management strategies. Only in this way will it be possible to avoid disagreements and the threat of premature termination of cooperation. A prerequisite is a documented partnership.
Rules for joint business
Only the choice of the right approach and compliance with certain requirements guarantee a successful business cooperation. Partnership will be an excellent tool and a way to increase revenue, if such moments are observed:
- determination of a specific goal, objectives and desired results of cooperation;
- initial distribution of powers, duties and income;
- deciding on the possibility of a partner participating in another business;
- monitoring of financial indicators in the process of cooperation, which is a performance check.
All conditions of partnership must be written down and legally confirmed.
Partnership in Russian business
As such, the partnership institution in Russia is quite young, although some enterprises use some of its elements in their activities. There are a number of domestic enterprises of such a plan, as well as organizations with the participation of foreign partners.
For the economic prosperity of the state, it is very important to develop business and partnerships. Russia cooperates with many states, while increasing investment capital.
More characteristic for our country is the interaction of the state and the private sector to solve socially significant problems. The so-called public-private partnership has a long history, including in Russia. However, it has reached particular popularity and relevance only in recent decades.
Public-Private Partnership
Several factors stimulate the emergence of relations between the state and business. Firstly, difficulties in socio-economic life greatly complicate the state's performance of its significant functions.
Secondly, new investment objects are always interesting for business. Thus, PPP is an alternative to the privatization of socially important objects of state property.
However, the partnership between the state and business, unlike privatization, retains a certain economic activity of the country. Most actively, such relationships are practiced in the following industries:
- Housing and communal services;
- transport, including urban;
- education and health;
- scientific field;
- construction of public buildings;
- financial sector.
At the same time, the state is actively involved in the production, administrative and financial activities of the enterprise, thus controlling the country's economic processes.
Sample Partnership Agreement
Upon the fact of cooperation between the parties, a business partnership agreement is drawn up. Sample such a document may be as follows.
Partnership agreement
[Date]
The organization [Name of organization], hereinafter referred to as Party 1, together with [Name of organization], hereinafter referred to as Party 2, have entered into this agreement as follows:
1) Subject of the agreement.
2) Responsibility of the parties.
3) The procedure for settlements and financial reporting.
4) The procedure for resolving disputes and force majeure.
5) Duration of the agreement.
6) Other conditions.
7) Details and signatures of the parties.
Depending on the specific situation, the most suitable form of contract is selected. They also use the general provisions governing activities and confirming coordinated cooperation in this area. In some cases, the procedure for amending and terminating the contract is disclosed . At the end of the document, details and signatures of the parties are indicated.