Partnership: Characteristics, Advantages, and Disadvantages

A partnership is a form of business structure where two or more individuals or entities come together to jointly operate and manage a business for mutual benefit. Partnerships are a common choice for entrepreneurs in Tanzania seeking to combine resources, skills, and expertise to achieve business objectives. This business model comes with distinct characteristics, along with various advantages and disadvantages that entrepreneurs should carefully consider when establishing a partnership in Tanzania.

Characteristics of Partnership:

  1. Multiple Owners: A partnership involves two or more individuals or entities, known as partners, who jointly own and manage the business.
  2. Shared Responsibilities: Partners share the responsibilities, decision-making, and management of the business based on the terms outlined in a partnership agreement.
  3. Profit Sharing: Profits and losses are typically distributed among partners according to the terms agreed upon in the partnership agreement.
  4. Legal Formalities: While partnerships can operate informally, it is advisable to have a written partnership agreement that outlines the rights, responsibilities, contributions, and profit-sharing arrangements of each partner.
  5. Limited Life: Partnerships may have a limited duration or may dissolve upon the withdrawal or death of a partner, as outlined in the partnership agreement.

Advantages of Partnership:

  1. Shared Resources: Partnerships allow for pooling of financial resources, skills, and expertise, which can lead to improved business outcomes.
  2. Diverse Skill Sets: Partners bring diverse skills, experiences, and knowledge to the business, which can enhance decision-making and problem-solving.
  3. Shared Responsibilities: Partners can distribute the workload and responsibilities, preventing a single individual from bearing the entire burden.
  4. Access to Capital: Partnerships may have better access to funding from multiple partners, potentially facilitating business expansion and growth.
  5. Risk Sharing: Risk is distributed among partners, reducing the financial burden on any one individual in case of losses or liabilities.

Disadvantages of Partnership:

  1. Shared Decision-Making: Partners must reach a consensus on major decisions, which can lead to disagreements and potential delays.
  2. Unlimited Liability: Similar to sole proprietorships, partners in a general partnership have unlimited personal liability for the business’s debts and obligations.
  3. Disagreements: Conflicts and differences of opinion among partners can strain relationships and hinder business progress.
  4. Limited Growth Potential: Depending on the structure and resources of the partnership, growth opportunities might be limited compared to larger corporations.
  5. Partnership Dissolution: Partnerships can face challenges when a partner wishes to exit or if the partnership dissolves due to disagreements or other reasons.


Partnerships offer entrepreneurs in Tanzania the advantage of combining resources, skills, and expertise to establish and operate a business. While partnerships can provide diverse perspectives and shared responsibilities, they also involve shared decision-making and potential disagreements. Entrepreneurs considering a partnership should carefully evaluate the strengths and weaknesses of this business structure, outline clear terms in a partnership agreement, and maintain open communication to ensure the success and longevity of the partnership in Tanzania’s competitive business environment.

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