The best partners in a business, like ingredients in a good meal, complement each other. They are not identical, but they are not entirely opposite, either. Your business partner should bring elements to the partnership that offset your weaknesses. Going into business with someone is a big commitment. Taking it seriously means carefully reflecting on what each person contributes to the partnership.
Great partnerships are forged, for example, when one person is effective at sales while another individual focuses on production and managing the finances. In addition, certain similarities are necessary to enjoy advantages from having a business partner. Most crucial among these is that successful partners communicate clearly about goals and working toward the common achievement of them.
The indispensable tool for evaluating a joint effort by partners on a growth trajectory is an accurate accounting of business results. Financial statements must be understood together by the partners. Among the areas to examine are the capital contributions and draws of each partner. In general, these should be proportional to ownership percentages. Partners will also compare the business income to hours worked by each of them. These should be in accordance with the design when the partnership was formed.
Both partners should have assurance from the business’s financial statements that profitability is unfolding as planned. Even more important is identifying areas for improvement when profits are disappointing. This triggers a renewed focus on either sales or cost controls. Action is usually necessary on both fronts, which means a coordinated effort by the partners.