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SFM Labs - Partnerships Between Business Partners

Updated: Sep 8, 2022

A quick disclaimer upfront: All information given in this presentation is researched and intended to be educational and illustrative to the specific topic, as always. Any companies, products, people, or other items mentioned do not constitute an endorsement, recommendation, or relationship. Every owner has to do their due diligence, as the decisions and responsibilities about any investment lie with the owner. This information is not financial advice.

📝Please note that the partner types in the following article are in no relation to SafeMoon's Partner Tiers.

What is a partnership in the business sector?

A partnership is an agreement between two or more business partners. An agreement on a subject matter, a business idea, or an action planned for the future has been reached and is recorded in a contract.

What does a partnership between businesses mean?

A partnership means many things to two or more participants.

When we think of a partnership, we immediately think of an agreement between two equal entities that want to walk a path together. Whether it is in the focus of the same business idea or the same thoughts to lead a company on several levels, both partners have the opportunity to strengthen their possibilities by coming together.

There are many reasons to enter into a partnership:

1. Same interests and intentions in the market

Both partners, who may or may not work in the same business field, may have the same intentions. For example, partnerships can arise between two identical companies that want to address a specific market and increase their positions within the market segment in the form of shares, for example car manufacturers or management consultants. The ability to expand their customer base and thus take advantage of the increased marketing opportunity is beneficial to both partners.

But partners from different industries can also use an agreement and cooperation to increase both interests. Let's take the example of the product manufacturer and seller, where the product manufacturer does little marketing due to his profession and work, but the seller can offer this effectively due to his widespread reach and ability to distribute the products, but does not create any products himself. A partnership offers the advantage for both,

since both can play an advantage on the basis of the product to be sold, but also on the basis of the reach.

2. Profit in the market

Profit is something that a company naturally wants to generate in the highest possible quantity. In the case of an agreement, the possibilities of the joint partnership can lead to a significant increase in profit.

If you need to manufacture a product using raw materials that are not available locally, this can create a partnership that favors the procurement of the raw materials and at the same time can provide the mass of material needed in a simple and direct, secured form. In this way, a company can calculate its costs and guarantee the reliability of its production, while increasing its profits under better conditions and providing the supplying company with a secure, higher source of income through continuous purchase.

3. Reach in the market

The cooperation of companies working in the same segment is not necessarily always based on profit or direct, joint work. Even if there is no direct cooperation, the availability of a group of companies can also increase the reach. For example, if several home improvement suppliers produce different parts, but all target the same market, it is worthwhile to offer their products together with the competition in an alliance, so that the customer has the opportunity to buy the respective products in the collected location, which he might otherwise either not notice at all or only with difficulty. In the case of corporate alliances, therefore, the aim does not necessarily have to be joint profit, but can also be the joint coverage of a market.

Different types of partnerships

There are different types of partnerships that can take place between companies. The four main categories are as follows:

1. General partnership

This is an agreement between several companies without much coordination or agreement. The profit from the joint work is shared equally, as everyone has an equal share. It is important to note that the responsibilities of all are shared, which means that for example if one of the partners takes a loan, it affects the entire partnership since the individual action always affects the sum of all partners.

2. Limited partnership (LP)

A limited partnership (LP) is a partnership in which the responsibility or participation in a joint venture is regulated differently than in a general partnership.

Here, there is one partner who has the entire responsibility and others who, due to the limited agreement, have certain obligations that limit their responsibility. This can be, for example, that a limited partner provides money as an investor, but has no responsibility in the form of management or decisions because he only gets back a part of the profits.

It may also be that a partner is used for a specific purpose, such as recruitment, production, or similar, which is then placed in different sub-companies based on the legal situation and security, whereby the partnership group then manages the events, but each separate company has a certain share of responsibility, whether in terms of representation in the legal situation, company management or provision of the products for the partnership project.

3. Limited liability partnership (LLP)

The structure of a limited liability partnership (LLP) is similar to a general partnership, but there are subtle differences. Each partner is responsible for the company as a whole in terms of legal and financial matters, but not for the mistakes of the individual partners. This means that if a partner company in the partnership causes problems due to incorrect management or defective products and thus damages its part in the partnership, this partner is also only legally responsible for its area. However, this means that only the specific area is meant and not the entire partnership, provided that the individual area of the individual partner has no influence on the entire partnership and its outcome of the product situation. The best example here is again the company with the home improvement suppliers produce, whereby a company that offers its products incorrectly is held accountable for this, while the entire partnership continues to sell the products of the other partner companies. The individual company must then provide compensation for this unless otherwise regulated (such as that the partnership group, instead of the individual company, bears damages of this kind).

4. Limited liability limited partnership (LLLP)

A limited liability limited partnership (LLLP) is a new type of partnership between several trading partners. In this case, the company operates in exactly the same way as a limited partnership (LP), with the difference that here there is at least one partner who assumes overall responsibility for the company and thus leads and manages it, with the other partners playing a relevant role with a limited number of rights and responsibilities and thus having liability protection.

What do partnerships mean for cryptocurrencies?

Partnerships in crypto finance between several providers of tokens or coins offer the same advantages as normal companies, but with a small difference: transparency.

The cooperation and the way of interaction are visible through blockchain and connected platforms such as CEXs or DEXs, the availability is much easier and faster and you can interact at short notice, at any time, and without closing times. It's available around the clock and you can see in a project that with the right partnerships, it can actually be a win-win situation for all partners within a system. Be it monetary, presence or availability, there are many benefits that can arise.

As we like to say at SafeMoon "a rising tide raises all ships".

What can come out of a partnership in the future?

Partnerships promise increased sales, more reach, and more presence on the market. A win-win situation for all parties involved, although the reality is usually different.

There are only very few partnerships that have actually generated an increase in revenue through the actual provision of the service, thus generating an increase for all that makes all partners happy.

The important thing to realize about a partnership is that - if you create it solely on the basis of profit - it is very likely that it will collapse and fail at some point. Because partnerships that are built on money alone will fall apart when another, a more advantageous partner comes along.

Partnerships are all about trust, transparency, and common ground. If you only clamor for a community and don't live it, you end up with a partnership that can be neither successful nor meaningful. It is therefore important to work together with everyone in a partnership and not to put oneself first, because only together can a partnership be successful.



Gandalf - SafeMoon Educator

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