Should you go for a 50/50 Partnership?

business partnership

Now this topic has been debated about a lot. And although many of them may not have arrived at any definite decision, most of them might have hinted to not to go into a 50/50 partnership. Since majority of the people advice to not to enter into such a partnership, you might feel that it is the right decision to make because so many people cannot be wrong at the same time.

True enough. 50/50 partnerships have their own disadvantages.

  • Confusion

There is no proper decision making authority which leads to confusion and chaos.

  • Profit sharing

The profits earned by the company has to be shared equally among the owners.

  • Disputes

Whenever a dispute arises among the owners on an issue, it’s resolution becomes difficult. Since both are equal partners hence no decision can be taken without the consent of each other. You cannot move ahead until you reach at a decision.

  • Constant communication

For the smooth working of the company, both the bosses need to keep talking and need to be on the same page. This might not sound so difficult but in a huge organisation, maintenance of constant communication becomes a task.

But equal partnerships have their own unique benefits too.

  • Diversified

The biggest advantage of having two owners is that the company gets the diversified skill sets of both the individuals on an equal level. This is a huge winning point for 50/50 partnerships.

  • Stability

Such kinds of corporations or companies have additional operational stability because of two working heads. Each can look out for the other one.

  • Flexibility

Since their is no single supreme power, there is a relaxed atmosphere and there is a sense of freedom and flexibility in the manner of approaching things.

  • Shared costs

If you are just starting up a venture then, fifty fifty partnerships are the best because you can split the cost of setting up and get that kind of financial support.

  • Shared responsibilities

The workload and responsibilities get divided which eases the work atmosphere.

  • Mutual support

In times of distress, there is someone whom you can look forward to for motivation and support.

The cons may seem to weigh heavier than the pros of an equal partnership but be cautious before getting into an uneven partnership especially if you are a minority owner. Because you areĀ  at a weak position in the business and your rights and decisions do not have the equal value as those of the majority owner.

Conclusion

Equal partnerships are a bit chaotic to handle but if the two partners have a good comradery, then things can workout pretty well. It is the one thing that an equity partnership demands, good bonding among the owners. So if two good friends who understand each other well start their own venture then, they can take it to great heights.

Do note that this is just a discussion and for further legalities of such partnerships one must not forget to consult an attorney.

Anum

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you’ll find her work all over the PF blogosphere.

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