How can strategic partnerships help my business grow?
I feel as though my growth has been plateauing and I am considering looking into strategic partnerships to help my business grow. How do I go about finding business partners and what should I look for?
Strategic partnerships are a great way to grow businesses. However, do keep in mind that strategic partnerships require attention and time to keep them healthy. Unfortunately most of the ad-hoc partnerships fail while most of the structured partnership succeed.
You might want to download my free ebook "Successful Partnerships & Alliances" on the topic: http://simoons.com/ebook I think it will be a good starter.
First, You have to identify potential partners with whom develop long- term and mutual-benefit relationships based on three goals: optimize your business model, acquire resources or reduce or share risks. All aimed at creating value for you and your customers.
Depending on your own goals, you should on the one hand, look for strategic alliances that help you take advantage of economies of scale in order to optimize your resources, for example, to reduce costs by outsourcing processes or sharing infrastructure . On the other hand, you might partner with other companies that are not competing directly with you but have knowledge of a market you are interested in getting into. As a result, you would have a positive impact on your cost structure and increase your base of customers, which in turn would boost your growth.
I'm also trying to develop my 3rd business. If I were to go out to find a strategic partner, I'd first evaluate my need - whether it is really a need and if yes, how critical is the need?
Are you available to open your business doors and "closets" to someone else?
At a very basic level, you are trying to bridge the gap between what you sell and what (new) customers buy. Customers buy much more than your product - they buy availability, they buy finance terms, they buy from trusted sellers, etc. Often, for product businesses, they are also buying installation and maintenance services, training, and so on. In short, customers buy a lot more than you want to sell, often because the "extra" stuff are things you can't deliver efficiently. That extra is where the partners come in.
So start by understanding what your potential customers want to buy, from whom, under what terms, when, where, etc. Carve out what you can deliver efficiently with some unique advantage. Then find (types of) companies that can deliver the rest. Go talk to them - you'll find that it's easy to structure a deal where your 1 and their 1 can be brought together to make 3.
Strategic Partnerships will help you do business with people you would never come in contact otherwise. SPs also give you opportunities to help others. Helpers get helped. You should find Strategic Partners that you can help, they will in turn help you.
Joint ventures or strategic partnerships are a great way to grow your business provided both parties are willing to help each other. For example, I am a business coach and I will email my list for other joint venture partners provided they do the same thing for me. It's a win-win situation. I know people who have grown their list by thousands of people.
First let's get beyond the obvious, make it a win win proposition yadda yadda yadda...the generalities of partnerships are simple, you want someone to promote your product and gain you growth, and they likely want the same in return.
1. First thing is to create a profile; just like you target ads on Facebook, target your strategic partnerships by market, industry, audience, relationship status (do they partner with anyone else, if not, you're the first and that's a harder sale0
You want to know what level of revenue, what type of customers they have, and if they are a direct competitor to you.
2. Find businesses you truly respect, which means do your diligence. Don't just go out there with a general idea, and pitch and email.
They need to know, like, and trust you. The first contact is building awareness, next contacts are for getting the to like you, and vice versa.
If you or the partner don't hit it off, move it on, and make sure you expedite this, don't do the partnership dance hoping it will work.
A good partner will work because you two can communicate, your goals work together, and both sides see a reason to expend the energy into doing it.
3. Get creative in the way you can contact them at first; I've done things like send an unusual physical mail to their address, a movie poster for example of a business idea, something intriguing to spark their interest and set up a phone call if this is cold.
4. Interview them for a podcast related to your business; you can get CEO's to talk about their business, everyone likes to talk about their business, and listen to them. You do the interview not just for content, but to build a relationship. Many you won't hit it off with, some you will - I've created tons of strategic partnerships with this method, because after the call, if you both like the style of each other, there's room to talk, if not, walk away and it's not a waste of your time or theirs.
5. Once you get beyond first contact, have your follow up ready, your white papers or numbers they can crunch. Ask them what they need - more customers, exposure, something that makes it worth while for both to participate.
6. Set up a test phase; test before it gets serious, then scale upon proof; make them and you prove it to each other, and tell them this. Set up a test run for 30 days and see what sticks, you'll know it when it does, and this is rare.
7. Remember the 95/5 rule; 5% of your partnerships will generate the lion's share of revenue, the rest will not, for you or for them. Knowing this, make the strategic partnership part of a selection process for both of you, and give each other an easy way to test the waters.
Finally, remember the old adage, your competitors are partners and your partners are competitors. I've seen tons of big Internet companies balk at working together, but when they do both grow.
Just make sure you're in a market where one brand doesn't control over 50%, like Google controls search. Take the Amazon approach; the reason they went into books first is because the big players only owned maybe 10-15% of a market.
Those are the markets where partnerships are readily available, approaching monopolies doesn't make sense unless you want to get acquired.
I saw Amazon take this approach with Shelfari, who sold books; they saw them, saw sales, engaged them, and over time built a relationship. Then they acquired them upon hitting benchmarks.
I wasn't part of the deal, this is from the outside looking at it, but what they did was create a partnership that had to prove itself, and if it doesn't within a fixed amount of time, move on.
So many try to create partnerships by basically getting married, when you should do a bit of dating, go steady with those that fit our scenario, and marry the 5% who do, in terms of strategic partnerships...
Byran, take a look at your industry and see who else also deals with your clients. This can be people who are not in direct competion with you that your products/services could enhance theirs.
It may even be a competitor that offers something different then you but their clients could benefit from using yours as well.
When you find someone to talk with don't go in with the idea of them working with you right away. Instead go to them and ask; "How can I serve you." and don't look for anything in return.
When you do this, you'll blow their minds because everyone else comes and says please oh please carry my products I need the business. With you coming in not asking for anything in return 99 times out of 100, the law of resciprosity sets in and they ask how can I help you.
Now you have a chance to talk. When you do start talking always, always talk BENEFITS, BENEFITS, BENEFTS. - what's in it for them.
Hope this helps.
John D. Allen
They can offer immediate growth in the combined clientele, skills and financial resources. Always consider the real value of what a partner can offer. Ride on a bigger brand and sell your uniqueness to them. Be careful of brand dilution. Have a performance clause for all contracts to ensure that you are covered in the event of non performance by the potential partner
Right on, @ Patrick Mazzotta!
The real question would be how you plan to grow the business without such partnerships. Some businesses can do without them, but the vast majority use them to achieve breakthrough, relieving the founders of the need to make dozens or hundreds of retail sales. Notice that is plural. One strategic partner will tire of you sooner or later, and when that happens you'll need to have established other channels. Where to land such a partner? Network, network. Know which channels are right for you and figure out who knows who that can get you an opportunity for a sales meeting.
You need to find a company of an appropriate size or with some sort of connection - maybe they are just looking for good products/services to represent - however I'd avoid the 'complimentary' businesses and look instead for companies in a 'complementary' field....
My company provides SR&ED, tax and advisory services to smaller companies - I have a connection with PwC to whom I can refer clients needing US and cross-border advice. They can't afford to market effectively to very early stage companies but want to make a connection as companies grow. They are very skilled in a great many specialty areas, but are too expensive unless they invest a great deal betting on good, new prospects.
Together we provider better and more cost-effective service to my better clients, and they get me to help with their prospecting.
As an alumni of PwC they know me and are prepared to work with me - in your case you need to find connections (or build them) with people and companies that can help you, and have a reason to want to connect with you...
I suggest the book : "Get Your Client Now" ( http://amzn.to/1bmh63Z )
I am in agreement with the others in the potential value of partnerships, creation of a business plan and researching those you would consider. I'd like to add that it might be worth it to research your competitors and try to find something unique you could offer with a good partner. You may be able to develop a unique niche and begin to own a market segment.
Developing and leveraging strategic marketing partners can help your business grow and at a very low cost. Look for a complimentary business where you could refer clients between one another and or work together as a team. Both you and a strategic partner would increase revenues with no additional advertising costs. There are a million places to meet business partners, but you want the ones most likely to bear fruit, so think from the end forward. Where do you already have trust and credibility that you could parlay into contacts? Networking with people you have a relationship with is one of the best ways to find potential partners. Let people close to you know that you're looking for a partnership.
I'd get a lunch budget together and start taking out people to see what's happening in your market. Don't treat it like you are single and looking for dates, but as a fact finding mission. Make sure that you give as much as you take, and you'll eventually see your path.
Some tips I can add from my own experience:
a - Generate a "hard to refuse proposition"
b - Leverage partner skills and unique value adds while providing your own USP
c - Emphasize trust more than anything
d - Deliver to what they need in their career/business
e - Work with them and not for them or expect them to work for you
f - Understand their day-to-day needs as opposed to that of yours
g - Find one that can integrate and offer hybridized solutions for your customers
h - Leverage against one locally and remote (don't have to stick to mere local ones)
i - Use the tools of the internet to stay connected (Skype, Webex, etc)
j - Have clear goals and objectives of partnership stated
k - Chart out an SoW (Statement of Work)
l - Agree with a written and signed NDA and MoU as you move forward
m - Get a pilot project on business strategy successful and then increase scale
SP's can be a great way to grow if done right. 1st you need to identify what you want out of the partnership (sales, access to potential customers and you do the selling, to eventually be acquired by someone, etc.) and then identify what you bring to the partner - this is key you have to paint the picture for them - the end game and how your/their market is changing and why the SP will solve problems the market is having.
Once you identify the potential partners you need to contact them at the highest level you can and speak to someone who will understand the strategic value a partnership will bring. The biggest suggestion I have is to make sure that a list of what each company will do and by what date it will be done is part of the agreement (as an appendix). This is key because most of the time, the dealmakers will be off to the next deal and someone within each organization will have to pick up the deal and (project) manage it. The deliverables and due dates for each deliverable will be the map used to understand how to develop the plan to achieve the expected results. Finally make sure their are milestones that each company has to meet along the way, this way you can see along the way if corrections need to be made and/or your partner is not living up to what they said they would.
Bryan: Is your business related to behavioral psychology tips provided through a mobile app? Without understanding the business or the content you produce, I would simply suggest looking for partners that could leverage your content/solution to improve THEIR business. Hypothetically this might be folks in the psychopharmacology arena or maybe folks in the memory arena such as Lumosity or even non-profits like the Alzheimer's Association.
You are definitely on the right track by simply asking this question. Strategic partnerships have been the single most effective lead generation strategies. Before you begin it is imperative that you evaluate any potential partnership with the following 2 rules:
1. The relationship must be mutually beneficially,
2. There needs to be complete transparency
To find partners I would start by looking at adjacent industries, or service providers. For example, a freelance web designer might look at an SEO company or marketing Agency for work.
Another place to look would be industry organizations or advocacy groups. Consider getting involved in their committees and if possible taking a leadership position. If you aren't able to join consider offering something that proceeds significant value to their membership such as a webinar, how to article, or even submit a speaking proposal if the opportunity warrants.
I hope this helps. Please feel free to message me if you would like some more specific recommendations to your products or services.
Best of luck.