Why strategic partnerships
“If you do not seek out allies and helpers, then you will be isolated and weak.” Sun Tzu
One of our dilemma as business owners is trying to do everything ourselves. It is tempting to romanticise about going it alone. But as experience dictates, running a business is hard, and we need all the help we can get.
We believe that business owners should never have to go it alone, which is why we have created this social platform to help you build your support network. Many of the relationships built in this community are prelude to forming strategic partnerships. Why is partnership important?
“It takes so much money to develop new products and to penetrate new markets that few companies can go it alone in every situation.” Harvard Business Review
Strategic partnerships can help us by expanding beyond our existing resources and capabilities, and position our business for new growth opportunities. In fact, I would consider partnership strategy to be integral in modern day business thinking.
The first step in considering strategic partnerships begins with full appreciation of your vision, and immediate goals. It is not for everyone, and it does not apply to all situations. You need to be clear if it will indeed help you achieve your goals.
Once you are confident that partnership is worth exploring, then the first step is determining the type of complementary business you need. Look for businesses that offer products and services that complement yours.
You might also wish to consider their experience, prior track record, and the type of customer base, industry or territory they have, market of which you may otherwise not be able to penetrate easily.
For example, if you are trying to reach more customers, but your strength is mainly in technology, then perhaps a strategic partner in marketing is what you need.
Or if you already have an existing customer base, and lowering fulfillment cost can help you cross sell, or break into different markets, then perhaps a strategic supplier partner may suit you better.
You should also consider criteria beyond how you can help each other, but that both companies are aligned in goals, and culturally compatible. For instance, ask the following questions:
- Do they have a clear intention to collaborate with you and your company?
- Are their goals aligned with yours?
- Do they have compatible people culture?
- Do they attract the type of clients you would like to attract?
- Do they have a good reputation in the market?
These are important considerations at the onset, as depending on what your research shows, it could make or break a deal.
Build partnerships on trust
Strategic partnerships are founded on strong business relationships. At the core of such relationships is trust. And trust takes time to build. This is why many strong strategic partnerships grew from existing business relationships. More likely than not, these businesses have worked together previously and therefore have a good appreciation of how each other operates and the synergy their partnership might create.
Did you know that strategic partnerships can exist at various levels? It ranges from marketing and business development partnerships such as joint events and cross selling, to revenue sharing from a joint project, all the way to equity-sharing partnerships. These different structures gives you an opportunity to test the waters and learn how effective and synergetic potential future partnerships can create.
Have you considered strategic partnerships for your business? What has been your experience? Do you have any other tips to share?