In the early days, the sole proprietorship business was the most common form of business arrangement, as the owner makes all the decisions and bears all losses or profits. The partnership kind of business is an advancement to sole proprietorship because, in this arrangement, two or more people come together for the sole purpose of entering into a contractual agreement. They agree on the share of capital, profit, losses, and duties. It’s important to state that there are different kinds of partnership arrangements. While some are fully liable in the event of a loss, others might just have a limited portion in the event of a loss.
The popular kind of partnership is the general partnership, where the partners are fully liable for all debts incurred. This kind of partnership does not need any legal backing as they are easy to dissolve and require very little documentation to begin. The limited type of partnership must have legal authorization from that state. Besides, they must have at least one general partner who is fully active and responsible for the business. Furthermore, these types of partnerships usually have partners who perform little or no business functions but they are partners because of the money they have invested in the partnership.
Having learned about the kinds of partnerships that exist, it’s important to also state that sometimes, the partnership business is subject to expiration and has to be renewed as and when due. This article gives six tips that can help with renewing a business partnership.
1. Business Review
Interestingly, a partnership agreement is similar to a marriage, where two people agree to forsake all others and come together to live as one. Partners can be likened to a married couple whose primary aim is ensuring that anything that’ll destroy the business in achieving its goal is nipped In the bud. Partners need to give a full account of all business wins, losses, and steps that they could have taken to avoid losses.
2. Job Description
Once a proper review of the last business quarter or contract has been properly reviewed and suggestions on how to improve operations have been harvested. A new job description tab must be opened before a new contract renewal document is endorsed. Consequently, the allocation should be based on the strengths and weaknesses of all partners and not based on who has the most authority or connection.
3. An Open Platform
It’s important to keep an open-door policy, where partners and employees can air their views regularly. Some business partnerships grow into becoming multinationals organizations, it is therefore very vital to communicate often and create platforms that support this movement.
4. Structure Check
The fact that a business has been in partnership before does not exactly mean they had put proper structures in place, that’ll aid the achievement of their partnership goals. Moreover, flexibility is the new approach and certain structural adjustments might be necessary to take the partnership to the next level. Hence, partners should ensure that all faulty foundations are rectified before proceeding with the new contract.
5. Documentation
It’s very vital to document all proceedings, meetings, and discussions that relate directly to the business. This allows for proper monitoring of events and happenings. Also, in case the business is being sued, these documents can be used as evidence in the court of law and that might just be the saving grace that exonerates the business from all accusations. It’s never a bad idea to write a legal agreement, even if you trust the other person in the partnership, because you never know.
6. Technology
Technology has birthed many tools that have a positive and significant impact on productivity which positively affects revenue. Partnerships must take this opportunity and find ways to utilize them, partnerships should discuss how to automate all business processes, even the process of renewing contracts. They should also consider going on training that’ll educate them on how to leverage this opportunity. Additionally, general partners ought to be constant researchers of relevant information that can aid business growth. This is because they are actively involved in the daily affairs of the business.
A partnership business is a good way to invest especially if all partners share the same vision and mission. However, they must subject their business affairs to scrutiny as this can help reduce future losses and mismanagement. A clear job description sets the pace for handling matters that relate to incompetence and defaulting partners should be made to face the music. Also, having regular meetings to discuss matters that concern the business should be encouraged and issues that emanate from the discussions should be addressed. This would enable the renewal agreement to take a proper shape. As those who can handle a particular segment better would be assigned to those roles.
