Anyone who owns a business has probably entertained the idea of a partnership. Managed intelligently, a good partnership can open the door to a new set of customers or simply increase exposure to the right ones. But as many entrepreneurs learn from bitter experience, the wrong partnership can be tantamount to flushing time and resources down the drain.
How often does this happen? Quite a bit, unfortunately. The partnership landscape for hyper-growth businesses has changed in fundamental ways in the last few years. It’s still possible to take partnerships to a profitable place, but as a business owner, you should understand the new rules of the game.
That starts with this reality: If you’re in hyper-growth mode, there’s no end to the businesses that may want to hitch their wagon to your star. LinkedIn invitations, business cards and proposals can all flow your way, promising an influx of revenue—but the result will usually be an outflow of your resources. To avoid the bad apples and work with quality partners, a certain amount of discrimination is required.
Start Smart, End Happy
All too often, a business owner struggling to end a bad partnership will claim they had no idea it would end up like that. In fact, I’m willing to bet the signs were there at the beginning.
No doubt you already have a mental wish list of partnership benefits, such as referral revenue, an IP exchange or a joint customer list. But focusing on these details can mean missing the forest for the trees. Instead, you should think bigger and focus on the most fundamental growth hack: partnering with the business that already has the customer you want.
Focus on this one rule, and you can eliminate a lot of headaches and dead ends right from the start. At the same time, you should think about how your customers can benefit from the partnership. Does the partner’s offering complement yours? Is the advantage to your customers immediately clear? If your base isn’t going to see value from the partner’s solution, you might want to walk away—even if the brand is a shiny, tempting one you’d like to affiliate with your own.
One of the best ways to predict a partnership’s outcome is to use the solution yourself. You can understand what your customers will get out of it and you’ll observe firsthand how well your partner takes care of its buyers. This is an important factor; once you partner with a company, your reputation is tied to its delivery. If it disappoints your customer base, your customers will likely blame you for recommending the solution in the first place.
Another thing to consider is how you and your partner find each other. Years ago, reputable business owners would contact each other over LinkedIn; today that may not foster trust like it used to. It can be better instead to finagle an introduction to thought leaders who are going to segment your area of focus. My most successful partnerships have formed organically—we found the partners on behalf of a client, used them ourselves or were referred by someone we trusted. Not one came from a card exchange at a trade show. I’m willing to bet that other business owners have had similar experiences.
As you start the partnership dialogue, be sure the other business aligns well with your company culture and personal communication style. You might think you can overlook a few personality clashes if enough revenue is at stake, but partnerships rarely turn out that way. You’ll work together more than you think, and any personal dislikes or incompatibilities can quickly hinder the alliance.
Make Sure There Is Two-Way Value
Just as in any relationship, both parties should be equally invested and contribute equal work. If one person is more interested than the other, or working harder, resentment and failure can be right around the corner. Your best approach here is two-fold: providing value from the beginning and managing the partnership proactively.
In practical terms, this can mean encouraging your customer base to try the partner’s solutions. It also means devising smart ways to reach the partner’s customers and treating them well once they walk through your doors. Too many business owners assume that the partnership is an end unto itself, and they can sit back and wait for new leads to roll in. It just doesn’t work that way; you should actively drive the customer expansion and be sure your business reflects well on your partner.
You should also communicate clearly and frequently with your partner. This goes back to the requirement of actually liking each other; if you and you partner barely speak, that silence and apathy can poison the partnership. To really leverage the relationship, you should work closely together and figure out what’s working and what needs to be improved. Remember, your partnership success can depend on that mutual compatibility. And by developing a synergy that makes your customers happy, you can help drive profit and expansion for both businesses.
Justin Gray is the CEO and chief marketing evangelist of LeadMD. He founded the company in 2009 with the vision of transforming traditional grassroots marketing efforts through the use of cloud-based marketing solutions. He is also a member of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world's most promising young entrepreneurs.
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