Partner up to power up your business

In your business journey, you’ll meet people along the way who you’d love to collaborate with, and you’ll be approached by other businesses wanting to partner with you. Before you jump in head first, here’s a helpful guide for building successful strategic partnerships that will help you to power up your business.

A strategic partnership is an agreement between one or more business that is mutually beneficial. Businesses of any size can team up with others to offer services, share costs, swap skills, and grow customer bases or block competition - and small businesses in particular can stand to benefit.

Strategic partnerships take many forms - long term or short, project-specific or indefinite, between two companies or more, between commercial and non-profit companies, and so on. The perfect fit for you is out there - you just have to know what to look for.

When considering a strategic partnership, it pays not to leap in. So it’s worth considering these factors before you sign the agreement — and talk to your support team of professionals too. Do your reseach beforehand so you feel confident that the reputation of your potenial partner is a good fit and will enhance your own. Allow for the possibility that your partnership won’t turn out completely as you envisioned it. Include a clause or two in your agreement about:

• How you’ll define liability and responsibilities of each party.
• How you’ll make decisions that affect both of you.
• How you’ll resolve conflict if it occurs and.
• When you’ll reassess and evaluate how it’s going.

Read on to see how a strategic partnership could work for you.

A strategic partnership aims to strike the right balance of collaboration and profit. Here are four interlinked benefits to get you thinking about what a strategic partnership could do for your business.

The ‘small’ part of running a small business can be challenging, and partnering up with larger companies could help take the edge off. Young brands need to focus on credibility, and forming strategic partnerships with well-established brands can make you look bigger in the eyes of potential customers. Picture your logo next to the logo of a global player on marketing material, or appearing as a partner on their website.

You could gain valuable exposure in large or international markets by forming the right partnerships, and gain a foothold that might otherwise take years. Similarly, teaming up with businesses that have developed unique channels of supply and distribution can help lead your business down paths that seem untenable on your own.

For example, if you run a small building business, you may not have the skills or resources to tender for large projects. Form a partnership with another business, though, and you could find yourself playing with the big guns much faster.

Always be on the look out for partnerships that your target market would benefit from. A strategic partnership with the right company can help you offer your customers the convenience of a ‘one-stop shop’. Run a web design company? Team up with a development shop and offer a package deal. Sell wellness retreats? Find a health supplies company that is on your wavelength.

Pairing up with a complementary business could also involve shared marketing and customer acquisition costs. Not only that, the right partnership could increase that most hallowed of assets —your customer database. You can team up to promote each other’s products and services to your respective customers. Or you might partner with a charity to achieve two aims — a greater social good and access to their well-developed customer database.

You don’t have to be good at everything — other businesses can step in to fill the gaps. Instead of trying to be everything to everyone, partner with businesses that excel at other things. Agree to not compete with similar companies in the same market, but hone your offerings and recommend each other. Do you have expertise in public relations and communications, but you’re not so into numbers? Team up with an accountant and swap skills — at a much lower cost than market rate.

Strategic partnerships also mean you can extend your resources — technical, financial, and so on — at a much faster rate while focusing on your strengths.

You might be tempted at first to invest in the lot — your own office and printing facilities, the latest technology, the edgiest research and development, the fastest transport services. But before you do, ask if yourself if a strategic partnership could help you save on costs.

The right partnership can help you keep precious cash resources in the business. You may engage in a form of barter (trading ideas or sharing equipment that doesn’t involve cash). A particular project might need some specialised technology, such as a machine or software, and you might share the costs. You might share an office space, or negotiate supply chain contracts as a team. Research and development costs, often out of the question for smaller businesses, could be shared with a partner. And the right partnership could offer possible tax advantages (always with the advice of experts, of course).

Before you get wooed by a large business wanting to benefit from your start-up pizzazz, or spontaneously agree to partner up with that like-minded person you met at a conference, think about what you really want from a partnership.

The trick to forming a successful strategic partnership is in the word ‘strategic’. Be as clear as you can about what you want to achieve with a partnership, and the types of companies you want to partner with.

Ask yourself some key questions.

• What does our business have to offer other businesses?
• What kinds of partnerships will benefit our customers?
• What are we lacking that could be fixed with the right partnership?
• What brands do we want to align ourselves with? What companies have values similar to ours?

Once you know what you need, don't wait for your phone to ring — be proactive. You are often the deciding factor in whether or not a strategic partnership gets off the ground.

Make a list of companies or individuals you could approach, noting the benefits for both your side and theirs. Come up with an approach that will suit their style and persuade them to agree with your proposal. Seek out the people you like, and who share your values. You may not need a comprehensive long-winded legal document for your strategic partnership, sometimes a concise one pager that captures all the main points will actually give your partnership a better chance of working out.

If possible, do some homework in your networks and online to find out what you can about their history partnering with others — in other words, check their references first! If a company is not as credible as it appears, the partnership could damage your credibility.

Base your partnership on open, honest communication, and set expectations and boundaries from the start. Clarify the objectives and the expected benefits, and make sure you agree on the fundamentals. If not, the partnership may not be the best fit.

Depending on the partnership, you might benefit from legal advice. In any case, you’ll want to protect your business by clarifying who will end up owning what — intellectual property, physical property, customer databases, marketing collateral, and so on.

Before agreeing to become partners indefinitely, consider kicking things off a with a temporary agreement. You might agree to be partners for a fixed term, such as 3 months, or you might agree to partner up to complete one project. Get the terms of the agreement down on paper, and dedicate time on both sides to making the partnership a success.

As one business owner puts it, ‘I like to set up the alliance for a specific purpose with a set end point. If it all works out, I’ll look at building a longer-term relationship. If not, well, we’ve agreed to go our separate ways at the end of the project, so there’s no messiness or hard feelings.’