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Partnerships are powerful, yet delicate, agreements between two or more parties where each is invested in the success and failure of the other. Whether the partnership is between a business and an individual, two or more businesses, or other entities such as charities, the partners must clearly define their roles, expectations and responsibilities. Successful partnerships require mutually agreed-upon plans and control mechanisms to be put in place.
A partnership agreement should be as detailed as possible, including how decisions will be made and how duties will be distributed between the partners. This will help to prevent conflicts, promote clear communication and set expectations for everyone involved. When decisions are to be made, the stated voting procedure should determine who the deciding partner is. The agreement should also set out specific actions (i.e. business development, advertising, software and technology), and the partners should decide which partner is primarily responsible for each task.
When developing a joint control system, the partners must come to an agreement on how to manage the partnerships finances. It is important to decide who holds a purse and who is responsible for the bottom line; this will ensure that money is not distributed without proper authorization. Other components to consider are the allocation of profits and losses, as well as determining which tactics or strategies are necessary for profitability. Each partner should also provide financial and administrative oversight to keep the business on track.
An effective partnership controls the executive decisions that affect the companys bottom line and long-term performance. It is important for the partners to decide who has the voting power and how the power is to be used. A voting table should be created which outlines who can make what decisions, when and how the decisions will be implemented. It is also important for the partners to agree on how issues are to be resolved: who is able to resolve the issue and how will the issue be solved? In most situations, issues should be discussed and resolved by consensus.
A good joint control system also involves monitoring the progress of the venture and evaluating its performance. The partners should create a system of reporting and review which ensures that both partners are consistently monitoring the progress of the venture. This is a key factor in any successful partnership, as it allows the partners to take corrective measures when required.
Finally, the partners must agree on how the partnership will be dissolved and the assets distributed if a situation arises that requires the termination of the agreement.
Partnerships are a great way to join forces and achieve common goals. But such agreements require detailed planning and clear control mechanisms in order to be successful. Partners should ensure that they clearly define their roles, responsibilities and expectations, establish a voting procedure and allocate duties, determine which partner manages the finances, and develop a system of monitoring and reporting to ensure success. With a well-thought-out control system in place, the partners can enjoy a viable and successful business relationship.
