Look around and you will see that at every level of business – from Nike and Apple to your local landscaper and painter – companies are joining forces. Strategic partnerships are becoming more common and will continue to grow. They will grow because there are many benefits to establishing a strategic partnership.
Some of the benefits include: increased market share, building your reputation through positive association, added value for your clients, shared costs/resources, scalability, brand revitalization, greater audience reach and moving you ahead of your competitors.
In a typical strategic partnership, each business operates as a separate legal entity. But, even though you may not be legally liable for your partner’s problems, there is always the potential for other risks. Here are 6 things to do to reduce risk, and have a successful partnership.
1. Shared values – Research and understand your prospective partner’s past, present and future corporate missions, goals and strategies. Also, be very clear with them about yours. You are looking for synergy, common ground and similar ideals.
What do they stand for/against? Do you have the same ideas on how business should be conducted? Do they meet your level of professionalism?
2. Brand vision – Make sure you share the same brand ideas, and that both parties will benefit from working together. Although your products may go together your visions may not – your brand is based on a “good, quality product”, while their brand is “our product is inexpensive (cheap)”.
Does the partnership evenly improve each of your brands, or is it lop-sided? What is their attitude toward customer service? Do they have a well conceived, long term plan for their brand?
3. Due diligence – It is vital that you take the time to do your homework. It may save you from problems (i.e. financial, reputation, market share, legal, guilt by association) in the future.
Are they on firm financial ground? How do the market, customer and community view them? How, exactly, will they enhance your business?
4. Communication – The key to initial and on-going success depends on communication, a lot of it. It is important to make regularly scheduled meetings a priority. You want to: monitor the action plan, review problems/issues, track ROI and assess goal attainment.
When and how will you communicate? What is the process for decisions making and who will be involved? What are the approval and refusal rights for all communications?
5. Identify expectations and division of work – Identify in writing who, what, when, where, how and why. Partnerships usually fail and end up in court because of unclear, therefore unmet, expectations. At the start identify and provide solutions for any problems which might come up. As the partnership progresses immediately address and resolve all difficulties.
What is the strategic plan and who is responsible for getting it completed? What ROI does each of you expect? Who is the project manager, what are his duties and how much power does he have in each company? What resources are each partner contributing (i.e. financial, staff, time, knowledge, experience)?
6. Legal – Even in the best of situations problems occur. It is always good to talk to a legal expert when you enter into a business relationship. Partnership agreements can be very helpful in building trust between companies.
Do you need a partnership agreement? Should you include arbitration? Does either partner have any past, present or possible future lawsuits?
Forming a strategic partnership with other companies who offer complementary products and services can be a great way to grow your business – when it is done correctly. But, when it is done incorrectly a partnership can be quite damaging to your business and brand. Take these steps to increase your chance of success.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: