Strategy: Responsibility and Accountability
Money is the lifeblood of any business. In a partnership it can become a source of disagreement unless there is a clear, written operating plan for how money will be managed and disbursed. One partner needs to be responsible for managing the finances. That means there must be clear accountability for income and expenses on a regular basis. When both partners are knowledgeable about the financial picture of the business, potential problem areas can be observed early and decisions can be made. Accusations and blame don’t help to resolve issues. When there is a discrepancy the person who is responsible should be ready to take action for future improvement. Plans to resolve financial issues should be agreed upon by both partners.
Managing income is just as important as managing disbursements. One or both partners may be responsible for generating revenue. Who is responsible for what needs to be clarified. You may be targeting the technology industry and I may be targeting all other small businesses. We can both make projections and be accountable for that portion of the revenue. But we may agree that I will manage the back office and you will generate all the revenue. Whatever it is, make sure you both understand who is responsible for what. Minimally a monthly P & L and Balance Sheet review are in order by both partners. A review of both income and expenses will show you where you need to focus attention. So some strategic decisions may need to be made. Now’s the time to do it; before it becomes an issue.
Unfortunately, good intentions about responsibility and accountability can fall by the wayside unless concerted intention and effort are put into it. You might benefit from taking the Prime Strategies training on how to become a successful partnership. Whether you’re just starting out or you’ve been in business for a while, setting up the partnership for success is not a luxury, it’s a necessity. If you’d like to know more about my Successful Partnership Series send me a note and I’ll be in touch.