by Anand Srinivasan, founder of LeadJoint.com
With a growing number of budding entrepreneurs and small business enterprises spreading across the globe, there is intense competition in every industry you can name. Smaller businesses particularly find themselves stifled due to the fierce competitive practices of large companies, which restricts their growth. A very limited consumer-base with specific needs is available to these entrepreneurs. They also have very limited avenues to vertically or horizontally scale up their businesses. This could be one of the reasons many smaller businesses or entrepreneurs prefer to form strategic partnerships.
Partnerships are quickly gaining popularity, especially among single-handedly operated enterprises, because of the benefits they offer. Together, you can offer a much wider array of services and increase your territories significantly as compared to what you and your partner could have achieved independently. There is also a scope to offer value-added services to your customers or clients at nominal additional costs. Another important benefit is that you both can cross-refer each other to clients. It is a common practice among marketers to cross-promote each other on their marketing campaigns. These tactics save a lot of time and effort that would normally be spent on developing new clientele, thus freeing up limited time and resources to focus on core business. This kind of cross-marketing strategy among partners is also beneficial to their clients and brings better value to them.
Obviously, you need to be very careful while selecting your business partner. If choosing the right business partner could easily lead you to a phenomenal business growth, pairing up with the wrong partner can create severe problems. If the partnership is toxic it could drain you financially, mentally and emotionally, spelling disaster for your business.
Instead, it makes perfect business sense to opt for a partner who complements your core business. For example, if you own a small web design firm, you can partner with a web development firm. This way, you could get web design projects that come your partner’s way while you could refer development projects that are out of your scope. Such a partnership is also handy in putting up a stronger pitch against larger competitors who may be well-resourced on these various service offerings. The possibilities with strategic partnerships are endless. Just use your ingenuity to pave your unique route to success, through a win-win collaboration!
However, just complementing each other on the business operations is not enough. You and your prospective partner should have similar value systems and business ethics. Since we are mainly talking about individually run enterprises, it would be much better if the entrepreneurs entering into any sort of business alliance have known each other for at least some time and get along well on a personal level.
Once you are sure about a particular person or enterprise, have everything sorted out and put on paper while entering the partnership. Clearly outline how the partnership would be carried out and etch out a proper costs-benefits analysis for each partner. All expectations of both the partners from each other, and how they will be fulfilled, should be put clearly on paper. It is very important to protect sensitive information and transaction data on both sides. Share data and your mutual transactions using a secure sharing platform. Remember – a breach of security could undermine your credibility with your partner(s) and spell doom for your coalition.
While transparency is key, it is also important to know when to withhold vital information from your strategic partners. Signing an NDA is an absolute must when you are sharing financial details about your business with a partner. In addition to this, if your partnership requires vital documents to be shared, please make sure that details not pertaining to your partnership are duly redacted from your scanned records.
Ensure that you and your partner(s) equally benefit from your joint operations. If one of the partners feels they are getting a raw deal in the partnership, it may lead to resentment, bitterness and mistrust, thus ruining the entire collaborator arrangement. As a precautionary measure, ensure that you have covered all your bases. Understand the reasons behind partnership failures and take proactive measures to prevent them.
A combination of mutual understanding and respect, along with a little caution is all you need to thrive in a partnership.
Anand Srinivasan is the founder of LeadJoint.com, an online lead generation tool for digital marketing agencies. He is also a part-time marketing consultant and has previously worked with some of the most promising Indian startups.