Thinking of collaborating? Four factors to consider before partnering with another business

Having a partner to achieve a certain task usually makes thing easier than doing all by your own. Same is true when running a business – having someone with you to share the responsibility of managing the business and facing the problems that your business encounter and may encounter in the future gives more peace of mind.

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Business Collaboration

If you run a business together with one or more other people, your business is a business partnership. This is a business structure that allows you and at least one other person to both have ownership of the business. Even though forming a partnership might make sense, it’s not your only option. Before you form a partnership, you must know that this type of business structure has both advantages and disadvantages.

The most obvious advantage of partnership is having some other people who can help you with all the business tasks. Managing a business is not easy with all the constant busyness, smouldering problems and overtime works, so having more people who will divide individually. By having a partner, you can also get skills and knowledge that you don’t have from them. Your partner might also have past experiences that can help direct your business onto a successful path.

Another advantage of collaborating with someone is having less financial burden. Starting a business can be expensive. You might have costly overhead expenses for inventory, equipment, retail space, etc. A partner can ease your financial burden. Instead of paying for everything yourself, your partner can split the cost.

Meanwhile, one of the biggest disadvantages of business collaboration is that you can’t make decisions on your own. You must work with your partner to make decisions, or at least run all decisions by your partner.

Another disadvantage is you have to split profits. Depending on how many partners you have, your share of the profits can get fairly small.

Read this article to see if business collaboration is really for you: