What are the pros and cons of working with a strategic partner?
The company I have set up is basically ready to be launched, but still needs some tweaking. Therefore, someone suggested looking for a strategic partner who could help out. I am wondering if there are any pros and cons I need to consider before going down that road.
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Everyone thanks so much for all the answers supplied: they have given me food for thought and am now more clear where I should be looking and going.
Pros are with proper sourcing, a great straegic partner will provide you instant access to markets, industry knowledge, customers & revenue. Cons are you will reduce your margins & potentially your confidential planning, strategy & product solutions. Overall its worth the cons to establish your self quickly in your targeted markets,
Strategic partners can be a tremendous way to access prospects you may not be able to reach as a new concern. The drawback is at what cost? You must be able to establish what is in it for the established strategic partner. You still have to market and develop prospects separate from the strategic partner as well. Never put all you eggs in one basket.
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Hello Ariadne , In order to go for a strategic partner , You need to plan your goals , vision , business plan which shows the expected partner the objectives of your business , Any partner needs to know the expected business growing accordingly .
Many of the answers already provided have raised critical issues regarding your question. My comments reflect taking your question at face value.
1. I suggest that you think of a strategic partnership as a joint venture between the parties where each contributes significant value to the marketing solution.
2. As others have said, if tweaking is all you need, a coach, adviser, consultant should be your reach. Partnerships are like marriages. Even the question of decision making becomes an issue.
3. Like any partnership, there will be sharing of the proceeds whether it be on an engagement by engagement basis, contracts received, or other metric. Therefore, there must be complete understanding of the roles to be played, compensation schemes and metrics.
4. The relationship must also have a formal understanding of a divorce between the parties. Of great importance is the creation, ownership and continuing access to any IP that results.
5. The "pre-nup" also needs to define who owns the client relationship and, in the event of a separation, the future relationship and/or sharing of post separation business.
Strategic partnerships are difficult to sustain and more difficult to dissolve. I suggest you find another structure to meet your needs.
there are ..let see the pros.
1. what kind of strategic partner area u looking for,
a) the partner to finance the project
b) the partner to assist in the implementation as an existing business
c) A partner in managing the process.
This will help inform the pros, you might be looking for.
the cons ;; could be many depending on the chosen approach above.
this we can deliberate further
The most practical advice I can offer (and it indirectly raises all kinds of pros and cons) is to think through how you would use a contract to set expectations. Obviously contracts take time and money but clarify expectations for risk and reward for both parties.
Strategy is a term business world adopted from Defense and as its origin suggest it is about winning the battles in view of being triumphant at the end. As it is inherent in the very concept of it, a Strategist can learn, analyze the situation, envisage and plan the Strategy but it would be up to the warrior to go out in the field to implement that strategy with anticipation of all the incidental challenges that might arise out of nowhere and couldn’t have been forethought.
In simple terms what this means is a Strategist can facilitate your Action Plan to the best possible extent in view of the ultimate victory that is a big PRO as you are benefiting from his/her analytical skills, knowledge, experience, foresight and mind mapping abilities. However ultimately it would be you who would fight on the battle-filed and are supposed to take instantaneous decisions that would be crucial in the end result. You will not have the Strategist to guide you at those critical moments... could be considered as a CON... if you become too much dependent on the strategy.
All the best!
There are many pros when having a strategic partner. The opportunities multiply. The talents and services provided multiply. Ideas and creativity created multiply. The only drawback I see is that sometimes you don't get to make the project go 100% the way you wish.
Selection of a strategic partner is the key - trust, mutual benefits, clear demarcation of responsibilities and deliverables, and knowledge sharing should ideally be the way forward.
It will also depend to a large extent to which are the areas in which you are going in for a strategic partnership.In your case I would, ideally recommend an external consultant who would carry out a gap analysis and advise you on how gaps in your processes would be bridged
I'm cheating a bit with your question. Here is a section from my Guerrilla Tourism Marketing Book about Strategic Alliances and considerations.
When creating a compelling offer to attract a fusion marketing partner, it is essential to factor in your three key numbers so that you can be sure the offer is a win-win-win for your business, your fusion marketing partner and for their customers.
1. Your CAC;
2. Your CLV; and
3. Your profit margin.
It can be a bit scary to look at an offer at face value, so it is important that you consider the CLV and profit margin too. If your CLV is high and your profit margin is high, then your initial offer can be more generous. Alternatively, if your CLV and/or your profit margin is low, a fusion marketing arrangement may not be the best marketing tool for you.
For example, if your average customer has a CLV of $3,000 and your ideal customer has a CLV of $6,000; you have a 20 percent profit margin and your CAC is $200. How much would you be willing to spend to attract more customers, in general, and more ideal customers, specifically? Doing some very simple math, the ideal customer currently nets you $6,000 x 20% = $1200 - $200 = $1,000 and your average customer nets you $3,000 x 20% = $600 - $200 = $400. It makes sense to enter into an arrangement where you reduce your CAC for your average customer since the CLV is only twice as much as the CAC. However, it makes more sense to enter into an arrangement to attract more ideal customers even if the CAC is higher than $200 since the ideal customer nets you 2½ times as much.
When choosing your fusion marketing partners, remember you both must share the same standards and values. Your reputation can be damaged by an unequal partnership. Also, choose fusion marketing partners that offer complementary products and services but do not compete with you. Your fusion marketing partners need to understand win-win-win situations. If your partnership is not collaborative, the partnership will not work. Partners need to be fully committed to the arrangement and they need to see how it will benefit all parties. Finally, if you are the host, be sure that you maintain control of your own list; be sure to be choosy when entering relationships and always ask yourself “Will my customers appreciate this ‘gift’?” If not, do not enter into the agreement, no matter how lucrative it may be for you as you do not want to upset your customers.
Put on your thinking cap and consider your customer and where else they might shop, then approach those business owners with a fusion marketing proposal. Remember, the proposal does not need to be complicated. You can say “Can you promote my business to your customers and I will promote your business to my customers for the next month?” or “I would like to give your customers ________, which will create goodwill for your business while it brings new customers to mine.
Hello Ariadne, if partnering is the right way for your specific needs can hardly be answered based upon your question. I have a free ebook on the topic that can be downloaded from http://petersimoons.com/ebook and am more than happy to have a chat with you about your question.
Strategic Partners are a great asset only when you are strong company coming together with another strong company that has the same marketing vision to the same target audience but with different products that work hand in hand. Otherwise, it can be a challenge.
I have only seen spin-off start ups working with strategic partners at an early phase. There are many cons and pros in this type of relationship. As many here has already mentioned, trust is really important. You surely want to have as much flexibility and don't want to be tied with unwanted relationship too early. The less trust you have over the partnering company, the more control mechanisms you might be bind with. It will affect your most important decisions and could get really expensive at some point. There are many pros too, however I will not get into details since you are not a spin-off company. I think the really valuable thing is to get yourself a business adviser /coach- someone who has experience in your field by suggesting him/her a board position. You can also get a consultant in the specific field (for example technical development).
It is a great exercise to have a strategic partner with excellent advise. If this is the course you choose, be sure you control as much of the discussion as possible. This can be done with proper questions that seek information needed. You private information should not be given away, but it is OK to give general information as your strategic partner will already have general business. Your questions should be designed to answer specific problems/opportunities.
Ariadne, Over the years I've had a variety of business partners in my various businesses. When I chose them based on business logic, I tended to be eventually handed "life lessons" that showed up in the form of my ending up out of pocket in some form or another. The huge lesson for me and now those I coach, is that our relationships in business (and elsewhere) are all reflecting our beliefs about relationships back to us.
So, the absolutely most important thing to do first, is to deal with any unresolved relationship patterns that, if not resolved, will show up in your business partnerships in unpleasant, probably expensive ways. If you'd like this taken care of quickly and easily, email me with a couple of available times (I'm in California), and we can set up a time to discuss it in depth.
Your desire to partner strategically is a great idea. Just remember, business partnerships are similar to marriage, and can be just as expensive when they fall apart.
All the best,
If it is a right partner - by definition, there would be no 'cons'. It should be mutually beneficial for both parties. The trick is to know exactly what you want from your partner.
What role would the strategic partner play? How would they help you accomplish your goals?
Working with a strategic partner of any kind requires "trust". So you need to do you homework before you enter into any kind of a relationship with a strategic partner. Obviously, you need a firm legal contractual agreement as to who owns what, who is sharing what with who, and how do you participate in the management and proceeds of the partnership? Good luck.