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The Do's and Dont's of Creating Lucrative Business Partnerships
I run a small meeting, event and conference planning company based in the New York City area. As an entrepreneur and small business owner with a limited advertising and marketing budget, developing business partnerships has been really helped me to get the word out about the services that I offer. For example, I have aligned myself with a DJ company as the preferred planner for their clients and am actively receiving business and referrals from this source. Also, due to my partnership with a travel agency, I am now handling meetings, conferences and events for inbound corporate groups from abroad. Forming strategic alliances has been and will continue to be a significant part of my long term business plan and model for exponential growth.
I have practiced the proverbial "art" of building non-competitive alliances with like minded companies, not just as a new entrepreneur, but also as a business building tool in all of my previous positions. While, on the whole, this strategy has yielded very positive results and significant revenue, there have been some negative consequences. So, I would like to share with you a very basic list of "do's and dont's" for creating successful business partnerships.
Do seek out companies where your services would be a natural addition to the resources currently offered. For example, if you are a catering service specializing in healthy cuisine, you might want to partner with health club to offer special incentives to gym goers.
Do choose organizations whose business ethic and overall image are at least generally compatible with yours. The last thing you want is to be associated with an organization who has questionable business practices. Although you may financially gain from such a partnership in the short term, that type of "bad business karma" can only affect you negatively in the long term.
Do determine beforehand whether you will be operating under the aegis of your own company or your partner's organization. If you are ABC company and your partner is XYZ corporation, will you be marketed separately as ABC company or an extension of your partner XYZ Inc.? Are you looking strictly for access to new clientele or for an opportunity for exposure as ABC company?
Do specify how referrals will be passed to you. Will clients be contacting you directly or will the initial inquiry pass through your partner?
Do specify your payment structure in writing. Will you paid directly by clients that come to you or will the billing process take place through your partner's organization? If you are not being paid directly, what is the billing and payment cycle through your partner's company? What percentage of commission, if any, will you owe to your partner for business that comes in through their company?
Don't dismiss partnerships with companies, organizations or individuals with whom you don't have an immediate and obvious synergy. Be open! Be creative! Explore! For example, I am in the process of working with several business coaches to create seminars on how to host successful product launches for home based businesses.
Don't neglect to do your research. Ideally, partner with an organization that you are familiar with and whose services you have either used personally or in a business setting. (Or, get at least three referrals from others familiar with your potential partner's services and business style.)
Don't accept verbal assurances, particularly where commission and payment structure is concerned. Even if you know and trust your partner, having a formal written agreement is insurance against misunderstanding.
Don't hesitate to question a partnership that is not living up to your expectations. Strategic alliances are a two way street. If your counterpart is following your business agreement, politely remind them of their responsibilities.
Don't reveal any information, resources, benefits etc. that make your value proposition unique until you are 100% sure how that information will be used and presented by your business partner. In short, strategic alliances can be an effective method of marketing, advertising and sharing resources. Whatever form your business partnership will take, be sure that expectations are clearly defined on both sides.
