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banking terms

By Victor S. Fischer
  ✍️ CRR Cash Reserve Ratio is the minimum fraction of total deposits of a bank’s customers that banks have to hold as reserves with the central bank. ✍️ SLR Statutory Liquidity Ratio is the ratio of liquid assets to the net demand and time liabilities. ✍️ LAF Liquid Adjustment Facility is a tool to allow banks to borrow money through repurchase agreements. It consists of repo and reverse repo operations. ✍️ MSF Marginal Standing Facility allows scheduled banks to borrow funds overnight from RBI against approved government securities. ✍️ MSS Market Stabilization Scheme is a monetary policy intervention by RBI to withdraw excess liquidity by selling government securities in the economy. ✍️ OMO Open Market Operations refers to the buying and selling of government securities in the open market so as to expand or contract the amount of money in the banking system. ✍️ REPO Repo...
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Partnership: Meaning, Advantages and Disadvantages

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Meaning of Partnership


A partnership occurs when several people work together for a common aim. Partnership means engaging with one’s partner. A partnership usually involves two people, however, it can involve three or more. All of the people involved in the partnership are called ‘partners’.

A partner is an associate. Working in partnership in business includes working together with other people to complete your business projects.

A partnership can occur in various contexts. Business partnerships are common, for example. Usually, a business partner is a joint owner. These involve several business-people contributing financial resources and ideas for the good of a given business. However, romantic relationships can also be called partnerships. For instance, a spouse is a life partner.

As you can see, then, partnerships can be formal or informal. They can be enshrined in law (like a business partnership) or they can be spontaneous or romantic.

Working in partnership brings benefits associated with problem solving and financial clout, among others. However, if one or several partners are bad with business, it can spell disaster. The advantages and disadvantages of working in a partnership is discussed below in points.

Advantages of Partnership.


  • Two heads are better than one. Creative thinking is so much easier when you have another person to bounce ideas off. With more people thinking both logically and creatively about problems, those problems will be solved more quickly. A perspective other than our own can be invaluable. Getting a different perspective on an issue is also a great way to find a better solution to it.
  • Stronger financial power: The more people in a partnership, the more financial power you have overall as they pool their investments. When there is a need for additional capital for business expansion, you can rely on your partner for capital infusion.
  • Additional clout. If your business has a ‘big name’ as one of its partners, it will have a higher standing in the business world.
  • Saving time. When several partners are working together on a project, everything will get done more quickly. with more people working on a project, it will be completed more speedily.
  • Cost effectiveness. When everyone pools their resources, more things can be done. And in a partnership each individual person pays less to achieve their aims that they would if they had to pay for everything all by themselves.
  • Sociability. Humans are sociable animals, and working in a partnership caters to our innate need to share and be sociable.
  • Someone to offload to. Having someone who understands what you are going through, what your aims are, and so on, is vital if you want to feel supported in achieving your goals.
  • Wider networks. You may have many business contacts and friends yourself. But, when you have a partner, your social and professional networks can double!
  • Better decision-making. When we are the only person making the decisions, we can make rash and spontaneous ones that we regret. A partner helps to hold us in check here.
  • Less selfishness. Having to think constantly about our partner’s opinion, and acting in the best interests of everyone rather than just ourselves, helps to stop us acting selfishly.
  • Mutual support: Partners can mutually support each other through good times and bad.
  • Fame and recognition: if one partner is a famous name in the business world, this will reflect well on the other partners.
  • Fun: Working with others can be so much fun.
  • Legal status: Going into partnership can offer you new legal advantages.

Disadvantages of Partnership.



  • Less autonomy: Having to agree everything with your business partners can reduce your autonomy.
  • Financial problems. If one partner is not good with finance, this can impact negatively on the shared finances of the partnership. Financials problems can can drag a partnership business down. In case of sole proprietorship business, the proprietor is wholly responsible for his financial decisions.
  • Slow decision-making: Having to debate and discuss every decision you make with your partner can really slow things down. Further, working to another person’s schedule can delay our projects.
  • Conflict. Disputes with your partner and differences of opinion can lead to conflicts that you may rather do without.
  • Feeling constrained. Some people find it very constrained or restricting being in a partnership. When you have to run everything that you do by your partner before you do it, you can wind up feeling very constrained.
  • A partner’s mistakes reflect on you. If your partner is rude or a bad businessperson this reflects badly not just on them but also on you as their partner and your business as a whole.
  • Entrepreneurship. Entrepreneurs often prefer to act alone rather than in partnership, so that they can really unleash their creativity and individuality.
  • Losing control. Some people may feel less in control when there is more than one person at the helm.
  • Not suitable for all temperaments: Some people are more introverted and prefer to work alone in solitude. Such people need personal space to think things through all by themselves. This can be hard with a partner around all the time.
  • Personality clashes. It takes two to argue. If both of you are natural leaders, you may experience significant clashes of personality – both partners will want to be in charge of the other!
  • Dissolving a partnership is hard. If you have entered legally into a partnership and you now want to dissolve that partnership, you should be prepared to expend a significant amount of time and money in order to do so.
  • Unnecessary: Sometimes, the nature of the business is such that it is not necessary to do things in partnership. In such businesses, it can be  more efficient to do things ourselves.

Conclusion.


Working in partnership can be a wonderful thing. With a partner by our side, we can enjoy more resources and more contacts that we did by ourselves. Partnership also helps us to find more creative solutions to problems and to get projects finished more quickly.

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By Victor S. Fischer

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