In my last post, I discussed what makes a good long-term partnership work. In this one I will look at the more fundamental question, “Why partner in the first place?”
The world is a big place. The amount of information available is growing rapidly. It’s become impossible for one organization to be an expert in everything. Even the largest companies have come to this realization.
For smaller companies partnering may be essential. It may be very difficult for a small company to provide enough breadth (skills and experience) to go against larger companies for big contracts. In many cases, if you are not big enough, you may not even get a seat at the table… sometimes size matters.
These are difficult economic times. Partnering can reduce marketing and sales costs. It can also spread risk such that both parties contribute to the strength of the partnership and absorb unexpected happenings.
So what do you do? Merge, acquire or partner? Merging and acquiring are actually partnering taken to different level. Assuming you don’t have extremely deep pockets, most businesses can benefit from strong partnerships. The key for longevity (as previously mentioned) is to have a genuine interest in the prosperity of the other party. This is certainly true for mergers or acquisitions… they are yours now.
Some aspects to choosing a good partner:
- Find companies with complementary products or services. Putting yours with theirs gives a stronger business solution.
- Find suppliers with strong skill sets and outsource some aspect of your business to them.
- Find companies that are really good at sales and/or marketing have them become the reseller or distributor.
- Any other creative solution.
The key to the long-term success will be that you are clear as to:
- Responsibilities and benefits of the partnership,
- How success will be measured,
- How both parties will contribute to manage the relationship, and
- How you will know the partnership no longer works and how you will disengage if that becomes the case.
Intentionally unbalanced relationships do not normally end well. Sure business is ruthless out in the marketplace. But if you deal with your friends, relationships and partnerships the same way as you deal with your competitors, you will find it a ruthless and lonely world, with everyone gunning for you. Bad reputations are hard to shake… even harder in a connected world.
Your best potential partner might be one of your current competitors!
Bottom-line, you will get out of a partnership what you put into it… it makes dollars and cents (and it feels right).