Equity Partnership: How to Make Small Businesses Big

Dear small business owners, have you ever considered equity partnership?

You may ask, why?

Don’t worry; that is what this article is for.

An equity partnership is about acquiring a portion of a business’s shares. This type of partnership allows the original owner to retain control while benefiting from external support and investment.

It enables small businesses to keep thriving in the money market despite growing competition and capital shortage.

The beauty of an equity partnership is that both parties benefit.

Now, let’s discuss their benefits.

What’s In It for Small Businesses?

Running a small business can be tough in a continent like Africa, and sometimes passion and hard work aren’t enough to get to the next level. This is where equity partnerships come in. These partnerships provide the support, resources, and connections you need to grow.

Here are the benefits of equity partnership on your business:

• Guaranteed Growth: External financial backing and strategic support enable your business to witness significant growth, such as operational efficiency, broader market reach, brand refurbishment, and, most importantly, a progressive increase in revenue.

Equity partnership isn’t an easy way out, nor a get-rich-quick scheme; rather, its benefits depend largely on the level of consistency and cooperation received from the venture.

• Retained Ownership: Small enterprise owners can continue to hold a considerable stake in their businesses after securing an equity partnership. They can still drive their vision and leadership while remaining at the helm of their affairs by leveraging on the external support of their equity partner.
• Broader Network: An equity partnership allows small businesses to gain access to a wide network of industry contacts, potential clients, and business opportunities. This, in turn, opens doors to a new market space and more partnerships for the business.

• Shared Risk: One of the exceptional advantages of an equity partnership is that both parties shoulder the risks that a small business owner would have borne alone. This helps the business successfully transition into a more stable and sustainable growth trajectory.

What Is in It for the Partner?

Aside from the economic values such partnership would bring into their loin, here are other benefits for a second party:

• Build Businesses: The second party in this agreement gets the privilege to identify and take pride in nurturing small businesses with high potential. By providing the financial resources and strategic support small enterprises need, they help businesses grow. This also allows them to build a distinguished portfolio, increase the value of their investment, and contribute to the economic and societal development of the region in which the business operates.
• Become Forerunners: In this part of the world, small businesses are not given much recognition or even enough chance to grow into a conglomerate. The partner becomes a pioneer, proving that small businesses, too, can become big with the right support or aid.  
• Create Lifelong Partnerships: Businesses all over the world thrive on collaboration, which is a prerequisite to creating long-term relationships and partnerships. Through the alliance with small businesses, the partner stands to gain a network of trusted and motivated entrepreneurs.

Ultimately, getting it right in building a business takes several intentional swirls and turns. Therefore, it is important you choose your next steps carefully. Equity partnership might just be what your small business needs to run on a bigger scale.

 FAQs

• How does equity partnership affect decision-making?

A: In an equity partnership, small business owners stay in control of the day-to-day operations, but when it comes to major issues, decisions are made collaboratively between both partners.

• Can equity partnership transition into a complete acquisition?

A: Yes, the agreement is flexible. If both parties agree, there is a possibility of evolving into a complete acquisition. However, this depends on various factors that both partners might need to discuss.

• What are the conditions for an equity partnership?

A: The perquisites of an equity partnership are not fixed; therefore, it largely depends on the agreement of both parties. Nevertheless, some conditions for an equity partnership could include capital contribution, profit and loss allocation, partnership role agreements, etc.