One of the best ways to extend the reach and revenue of your business is through strategic partnerships. If you can identify a business that offers complementary products and services and can create a mutually beneficial relationship with the owner, it can help both of your businesses grow.
However, as powerful as a great strategic partnership can be, the downside of a failed one can be painful both emotionally and financially. Here are a few ideas to make sure you put yourself in the best possible position if you want to develop a positive and successful strategic partnership.
1. Make sure your products or services are compatible. A strategic partnership works best when there’s a true synergistic relationship between the products and services your business offers and what the partner’s business offers. Some classic examples might be a tire store that creates a partnership with the detailing firm, an accountant and corporate attorney who refer business to each other, a fitness club that creates a partnership with an athletic clothing store and a house painter who strikes up a partnership with a handyman. The goal is to figure out who you share the same customers with and find a way to combine your services for even greater value to those customers.
2. Make sure your values are compatible. It doesn’t matter how well your businesses complement each other if the strategic partner does not share similar core values built around honesty, integrity, customer service and business professionalism. So it is essential that you take the time to truly get to know as much as you can about the potential partner and share as much information as you possibly can in an effort to know and understand each other deeply.
3. Create detailed expectations.An unclear expectation about how a partnership will work is the single biggest cause for partnerships to end up in litigation. To avoid this, it is imperative that you sit down together and write out to understanding of what your partnership will entail. Cover every possible scenario you can think of—including how the money will be divided, how you’ll deal with problems and issues, and how you’ll share customers—and then gain very clear agreement on how you will address each issue. If you do this before you do any business together, it will save you many sleepless nights and a throbbing headaches.
4. Keep talking.Lastly, it is important that you keep the lines of communication open between your organizations by scheduling regular meetings to check on progress, review issues and re-visit your partnership agreement. This helps to make sure that everybody is on the same page and highly pleased with how things are moving forward. These meetings should be held weekly, or at the very least monthly, to make sure that you catch problems before they become big and messy. Here’s a phrase I have used for a long time to address this: Kill the monster while it’s small.
When done correctly, strategic business partnerships can have a huge and positive impact on your company’s success by allowing you to add more value to your customers, increase market share and increase share of wallet. When done poorly, they can also destroy a business. So follow the steps listed above to help you optimize your ability in creating successful and enduring strategic business partnerships.