You know the phrase “two heads are better than one”? That rings true in the world of business.
The right strategic partner can open a whole new world for a growing company – whether that’s new consumers, new markets, or even just a new perspective.
Think about it: More people means more knowledge, which can be especially useful if you’re working with partners in industries where you might not have any expertise.
As it stands, more than half of organizations use partnerships to acquire new customers, and many see big results.
Just take Greg Butterfield, CEO of the software company Altiris. Butterfield managed to grow his business from $3 million in revenue in 1999 to $339 million in revenue less than a decade later – and that’s without even considering the company’s wildly successful IPO.
How’d he do it? Butterfield utilized large strategic partners to help him sell his products. Their consumers became his consumers.
In truth, a great partnership provides a fierce competitive advantage. But the wrong partnership can be utterly disastrous to business. It’s a delicate balance, and 45% of executives agree that maintaining mutually rewarding strategic partnerships is a big challenge.
How do you find the right partnership, one that helps move everyone forward? These five tips can help.
Identify your business goals
It’s impossible to find the perfect partnership if you don’t know what you want out of it. For this reason, you have to clearly define your business goals before you start your search. What exactly are you trying to accomplish? Most successful strategic partnerships either:
- Help a business enter a new market
- Increase sales in an existing market
- Gain financial or human capital
- Improve access to technology
For example, a company that manufactures guitars may wish to partner with a company that manufactures amplifiers because they have similar target markets and can pool their resources to reach a larger group of consumers. Most people aren’t buying electric guitars without amps.
Similarly, that same guitar manufacturer may opt to partner with a brand that makes high-quality guitar pickups. This increases the value of the guitar (i.e., it brings in extra revenue) while introducing the pickup brand to a whole new audience. It’s a win-win.
Before jumping into any alliance, it’s imperative to define your overall goals and the timeframe in which you want to achieve them. You want to be able to give as much as you receive, and whoever signs on should have the capacity to move full steam ahead.
Lead with your values and vision
We all use values to guide the way we do business, and the most successful partners share the same values. They have the same idea of what’s considered good, what’s considered bad, and what’s considered an absolute never.
This is important, especially since doing business can easily become emotionally charged. You want to minimize any chance of you and your partner not seeing eye-to-eye. And you never want to put yourself in a position where you’re forced to sacrifice your morals and integrity because you signed on the dotted line.
Even without the potential for disagreements, your brand is building a culture, and that’s part of what you sell to consumers. If your partner’s values don’t fit into that culture, consumers will notice – and that doesn’t exactly breed trust.
For example, an accessories brand promoting eco-friendly jewelry may want to avoid partnering with a fast fashion brand that’s known for using plastics and synthetic fabrics. The values don’t align.
Consider their skill sets
You can’t be an expert in everything, but you can partner with someone who is. Some of the most fruitful partnerships are between companies that have different skill sets.
For example, Dell makes PCs, but they work specifically with Intel – which manufactures processors – to craft a line of laptops fine-tuned for mobile performance and better suited for customers in transit. It’s a perfect marriage.
Ideally, your partnership should play to the strengths and weaknesses of both companies. You should complement each other, so where you’re a bit shaky, they can step in.
Start building a relationship
Once you find a company that shares your values and compliments your skills, you have to approach them and propose a partnership.
This can be a long process. You need to first find a key decision-maker, someone who can authorize a major business decision. If you start by developing a relationship, you’ll probably be more successful in landing the partnership rather than just launching into an elevator pitch.
Once you’re on their radar, create a preliminary plan that explains how the partnership will benefit both parties, and fire away. There’s less of a chance they’ll say no if they already like you.
Plan for the ending
It’s hard to think about an ending before you’ve even got a beginning, but hear this out. Ending an alliance isn’t always a bad thing. In fact, knowing when to quit is a crucial part of any alliance.
Sometimes closing a door means you’ve sold your company for millions. Sometimes a partnership just ran its course. You achieved what you wanted to achieve.
Either way, partners need to be on the same page about what to do once the partnership ends. Does it make sense for a non-compete clause? Who owns the intellectual property? The right partner will be on the same page.
Scott Miraglia is a balanced risk-taker with nearly three decades of experience starting and growing advertising and marketing agencies. He is currently the president at Elevation, where he uses his business acumen to help creative teams realize their full potential while serving up impressive business wins for clients.
