Strategic partnerships or alliances can be very effective business tools and are important to the health and growth of a company. They can enhance capabilities, and open up shared access to new markets, channels, intellectual property and lowered risk. But they can also be complex. Once you form this type of partnership, it takes some effort to maintain it and ensure that it is a win-win for both parties involved. By taking the right steps and having a clear vision for your long-term strategic partnership, you can help it create value, thrive, and boost your business.
Narrow Your Focus
There are many businesses that you could form a partnership with, but you have to narrow it down to what makes the most sense. What partners serve similar customer bases that make sense? For example, if you have a landscaping business, consider partnering with a nursery or a landscaping supply company. You’ll be serving the same buyer and can pass on referrals while streamlining the process and relationship for the customer.
See Both Sides
A strategic partnership, like any relationship, needs to work for both sides in order for it to flourish and yield mutual benefits. When you’re pitching the alliance to a potential partner, consider the benefits for them and present them clearly.
These long-term relationships take time to build and can take a little time to get off the ground and demonstrate results. Both parties will need to have realistic expectations. Be patient with the process and focus on ways you can strengthen the partnership while things take off.
Cultivate, Not Compete
In some cases, your business offerings might overlap with that of your partner. This is when it’s important that you do not compete with each other. Think about these scenarios in the beginning of the process and identify where there may be overlap and come to an agreement on how to handle it. The bottom line is that you do not want to steal business from your partner. You’re there to help each other and need to figure out the best ways to do so.
Keep Your Options Open
Before entering into a partnership agreement, consider how to protect yourself in the event that the alliance doesn’t turn out well. Avoid exclusivity, restrictive long-term agreements, and make sure there is a clear path for you to walk away if needed. You need to spend your time focused on growing your business, not trying to fix a failing partnership. Another benefit of keeping your exit options open is that it can offer incentive for both sides to make it work. If your partner recognizes the benefits of the partnership for them and that you can back out if it’s not working for you, they will be more motivated to make sure it works for both sides.
Among the most commonly reported reasons that strategic partnerships fail is that there is misalignment of the objectives of the partnership, a lack of effective internal and external communication, and unclear roles and responsibilities. As long as you maintain clear communication at all times, you can create trust and avoid the problems that occur when leadership is not on the same page. Part of this process includes emphasizing accountability and putting metrics in place to measure success. And this communication doesn’t just apply to management. Staff needs to understand the joint venture to avoid confusion and problems that arise from a lack of clarity. You might even want to consider creating an alliance management team to track progress, flag any problematic situations, and ensure there is a free flow of communication.
Contact an Expert
When done right, a strategic partnership can benefit both companies involved, creating potential for increased growth and improved efficiencies. If you are considering growing, selling, or exiting your business, contact one of our M&A advisors at Benchmark International. Our award-winning strategies have proven potential to change the game for your company and your future.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
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