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  • Capital - Due to the nature of the business, the partners will fund the business with start up capital. This means that the more partners there are, the more money they can put into the business, which will allow better flexibility and more potential for growth. It also means more potential profit, which will be equally shared between the partners.
  • Flexibility - A partnership is generally easier to form, manage and run. They are less strictly regulated than companies, in terms of the laws governing the formation and because the partners have the only say in the way the business is run (without interference by shareholders) they are far more flexible in terms of management, as long as all the partners can agree.
  • Shared Responsibility - Partners can share the responsibility of the running of the business. This will allow them to make the most of their abilities. Rather than splitting the management and taking an equal share of each business task, they might well split the work according to their skills. So if one partner is good with figures, they might deal with the book keeping and accounts, while the other partner might have a flare for sales and therefore be the main sales person for the business.
  • Decision Making - Partners share the decision making and can help each other out when they need to. More partners means more brains that can be picked for business ideas and for the solving of problems that the business encounters.
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Related Questions

What is the disadvantage of musharakah?

One disadvantage of musharakah, a partnership-based Islamic finance model, is the potential for conflicts among partners due to differing management styles, goals, or profit-sharing expectations. Additionally, it requires a high level of trust and transparency, which may be challenging to maintain. The complexity of structuring the partnership and the need for thorough legal agreements can also lead to increased costs and time investment.


What are the advantages and disadvantages of musharakah?

Musharakah, a partnership-based financing model in Islamic finance, offers advantages such as shared risk and profit, fostering trust and collaboration among partners. It promotes ethical investment and aligns with Islamic principles, avoiding interest-based transactions. However, disadvantages include potential conflicts in decision-making, the complexity of agreements, and the challenge of managing diverse partner expectations and contributions. These factors can complicate operations and affect the overall success of the venture.


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