Business partnering is a very potent tool for business development. Basically, every business, from small companies to large enterprises, it is a necessary tool which is part of any successful business plan. Business partnering is very important as they provide certain benefits for both parties. One of these benefits is the reduction of general costs, as partners ensure to pool their resources together in order to carry out business projects. It also increases competitive advantage, as it provides better opportunities for investment, occupation, and revenue to the business. Business expansion can also be achieved through partnership, as the pooling of resources, provides financial wherewithal for capital-intensive projects.
It is important to know that forming partnerships is not easy, and not all partnerships work out at the end of the day. This makes it very critical for you to thoroughly investigate your potential partner during the discovery period, to be sure you can produce a mutually beneficial relationship that would fulfill the objectives of every organization involved. In the process of forming a partnership, there are three opportunities which should be evidently available for you to gain from your partner. These opportunities are leverage, incremental revenue, and scalability. For leverage; this entails that the potential partner must have a brand, strategic market presence or product that your firm can leverage from. There should also be an opportunity for continuity of increased revenue. Scalability, on the other hand, means that the engagement of this leverage should be repeatable and be effective across the sales forces. In the case that these opportunities are evident, it is safe to form a partnership.
Steps For Forming A Strong Partnership
There are different types of business partnerships, which are formed for a lot of diverse reasons. These partnerships could take the form of long-term formal legal commitment or simply a short time venture for the purpose of testing a market concept. Whatever the case is, they follow the same principles to be successful. Below are strategies for building a strong and long-lasting partnership.
• Create A Shared Vision and Mission: As it applies in every area of business, the first step in a partnership is for partners to define the vision and mission of the venture. This is because the motive for every party could be different from that of the other; which will cause problems and friction in the running of the business. The best thing to do is discuss the vision and mission of your firm with your partners. Also, seek to discover what motivates the other party about the partnership. Go further to give the partnership a set purpose, as this would act as a guide in achieving your goals.
• Address The Needs And Expectations Of Every Partner: Every partner has a specific reason for forming a partnership. Some of the common reasons for being in a partnership include; the need for capital, the need for connections or the need for expertise. Typically, a partnership brings about business development for all the partners. When these needs are not expressed, the expectations of the partners might not be met, and this typically causes strained relationships.
This is why it is necessary to have a discussion on the topic of expectations before contracts are signed. A clear modification plan also needs to be set in place as interests and needs might change over time.
• Set Company And Individual Goals: The best way to go about achieving set goals is to prioritize the goals of the company. Partners should set company goals, after which they can then create individual goals for their firms. Individual goals should support and compliment company goals.
Both parties should be involved in setting the company goals, after which each partner can set individual goals that support the partnership in their areas of expertise.
• Defining The Job Role For Each Partner: It is also very important to clearly define the job role and responsibilities of every partner. This should include the tasks and duties which such partner is responsible for. Doing this ensures accountability by providing clarification on the role of every partner.
• Agreements And Contracts: In partnerships, it is important to document all of the important details of the agreement. Details such as the type of relationship, mutual risks, responsibilities, rewards, payments, branding guidelines, service level agreements as well as rules of engagement are to be documented.
• Utilize The Strengths Of Each Partner: All partners have their strong qualities, which they bring to the partnership. These strengths might be very evident or underlying. This should be considered in setting up the partnership to run. Each aspect of the partnership should be set to play to the strength of respective partners.
• Identify And Address The Limitations Of The Partnership: There might be areas in which the business partnership has little limitations; such as marketing and sales, financial management, or service development. It is important to identify these areas early on and tackle them, as they might get out of hand, and pose a big problem later on.
Examine these limitations early on and seek ways to resolve it, as it could end up wrecking the partnership.
• Review: This is also very important in a business partnership. All partners should decide on how the success of the partnership will be put under review. Will the review be regular? Where will they take place? Weekly calls or video conferencing, as well as quarterly meetings, are methods of review which can be opted for.
In conclusion, partnership is an ongoing process which takes time to mature. You should therefore not expect that things kick off on a perfect note. For a fact, the best partnerships take several months and years to reach its maximum potential. The time and effort put in are always beneficial in the end. With the great opportunities you stand to gain; such as business development as well as business expansion, being in a partnership is better than being alone.