There are multiple benefits to entering into a partnership in business terms. It’s a way of building a support network around your company, and it serves to increase your exposure and your sales. As business operations go, partnerships are generally seen as mutually beneficial arrangements.
That said, there can certainly be such thing as a poor partnership in business. Small and medium-sized enterprises should naturally be interested in punching slightly above their weight, but this should never lead to their exploitation in an unequal business relationship.
This article provides useful tips and insights for companies who’re considering entering into some business partnerships, and for those who’re perhaps interested in getting more out of their current arrangements.
“The keystone of successful business is cooperation. Friction retards progress.” — James Cash Penney
What Benefits Can I Enjoy?
There are two main benefits to business partnerships. The first is that you’ll be able to attract more consumers to your business through cross-promotion. You promote the products and services offered by your partner; your partner promotes the products and services that your company offers. It’s a simple way of combining two separate audiences into a larger, shared audience.
The second benefit is more applicable to those medium-sized businesses that are looking to increase their product or service provision. If, for example, you’re a business that’s unable to produce a product that your customers are demanding, you should be able to find a business that’s a good match for your gaps, with your own products filling their gaps, too.
1. They’re Easy to Organize
Business partnerships are far easier to organize than you might have first imagined. That’s because there are so many small and medium-sized businesses out there that are all looking for other organizations to help them build their brand, increase their exposure and boost their sales.
Depending on the size of the organization that you’re looking to approach, you’ll probably not have to do more than send a formal email introducing yourself and your business to set up a phone call where you can discuss the mutual benefits that you’ll be able to enjoy as a result of forming a partnership.
Conversely, you may find yourself approached by other businesses. The advice is different here: be very critical of their practices and their offer. Those who come to partner with your business aren’t all going to be angels. Some will be downright damaging to your brand, more of a hindrance than a help. Be wise and always consult before agreeing to a partnership.
2. Be Strategic
In a business utopia, all relationships are mutually beneficial, and all profits are shared. In the real world, this is far from true, and successful business is often a case of striking the best possible deal for your business. You shouldn’t lose sight of this truism when you’re negotiating your business partnership.
There are several factors that you should consider when entering into a business partnership, and in all cases, you should ensure that your business is reaping some significant benefits before you strike a deal.
- Is this partnership going to expose you to a whole new audience of consumers?
- Is the business you’re partnering with trustworthy, reliable and well-regarded?
- Are you able to communicate well with your contact in the business?
- Are your businesses complementing one another so that mutual benefit is assured?
- Is the business you’re partnering with competing with you and your products?
- Will you need a commercial loan to help you find partners?
When you’re asking yourself these questions, be sure to bear your overall strategy in mind: why are you looking to partner in the first place? If it’s for promotion, then find a partner with impressive web traffic. If it’s for product support, then make sure the company you’re cross-promoting with isn’t offering direct competition of your own product range.
“I’ve been burned by not having the right agreements in place. It’s important for business partners to have clear partnership agreements drafted by attorneys.” — Patrick Hull, Serial Entrepreneur
3. Don’t Overload
When considering the benefits of business partnerships, the temptation can be to overload until you’ve secured a number of connections that are serving to promote your brand. It may seem a no-brainer to you: it’s free mutual marketing, the little guys sticking together.
Imagine how this might look to your consumers and visitors to your website. The more partnerships you maintain, the more you’re diluting your own influence over your web domain. Instead, you should simply select the most appropriate partnerships, perhaps two or three, that fit perfectly with your own aspirations and strategies.
4. Know When to End Them
Business partnerships can often be a largely beneficial exercise, with benefits to enjoy for both parties as they attempt to make their way to the pinnacle of their particular niche. However, such fairytales rarely last forever. At some point, you might outgrow the business you’re partnering with or vice versa. You might change your strategy, or rebrand in a direction that’s no longer suited to this particular partnership.
In such cases, you’ll simply have to cut off ties with your partnered business. You’ll usually be able to do this instantaneously unless you’ve drawn up a contract stipulating that you should be partnered for a certain period of time. Alternatively, if you’ve reached a point far beyond your partner in terms of success, consider financing a business acquisition through a loan to buy their company and usher it under your own umbrella.
5. Follow Your Goals
As with your strategizing, your overall partnership plan should be derived from the ultimate goals you hold as crucial for your company. As partners come and go, they should all be helping drag you towards these goals, whether they be regarding brand recognition or sales generation.
You’ll find that business partnerships are, on the whole, a positive step for all small businesses on the charge towards greater success. They anchor you in the business environment of your choosing and can lead to coincidental moments of fortune in which your collaboration with your partners can lead to something far more profitable than the usual cross-promotional capacities of business partnerships.
Your business is your own, and as such you should be careful not to give too much of it away to third parties and partners who might be enjoying the benefits of your mutual association far more than you. Business is competition, and you should bear this in mind as you set up your partnerships, and plan for the months and years ahead.