Strategic partnerships are an essential aspect of business growth, providing businesses with opportunities to share resources and expertise and fill gaps for mutual benefits. In simple terms, strategic partnerships are formal alliances between two businesses working together to achieve common goals. However, it is crucial to understand that strategic partnerships are not joint ventures, mergers, or acquisitions.
In 1993, Starbucks partnered with Barnes & Noble bookstores to open Starbucks coffee shops inside the storefronts. This partnership proved to be a successful move for both companies. More recently, Starbucks entered the Chinese market and turned an unlikely customer base that traditionally prefers tea into its fastest-growing market. One of the reasons Starbucks was so successful was that it partnered with local Chinese companies. They partnered with three different companies to cater to the intricacies of each market in the northern, southern, and eastern regions of the country.
Partnerships can be quite beneficial, especially when companies are looking to expand into new markets or venture into new product lines. For instance, licensing the rights to a partner and allowing them to sell your product in a new market can expand the reach of your product despite legal or regulatory hurdles.
Despite the benefits of business growth, strategic partnerships are not without risks. Studies suggest that anywhere between 30 and 70% of partnerships are unsuccessful for one or both of the companies. The risks associated with strategic partnerships include monetary losses due to one or both companies failing to perform, legal issues and lawsuits that can result from partnerships gone sour, high expenses of getting out of a partnership, and loss of valuable intellectual property or other core strategic assets that are shared with the partner company.
It is, therefore, essential to keep in mind that the more planning that is done upfront before the partnership, the greater the chance for that partnership’s success. Below are a few tips to follow if you are considering finding a partner for your business:
1. Choose Businesses That Complement Your Own
When selecting a partner, pick one that complements your business. Both companies should fill in each other’s knowledge and expertise gaps. You want a partner that has familiarity with both your offerings and your customer base and shares the same core areas of success as your business.
2. Hone Your List
Not every situation requires a partnership, so make sure that the partnership is the right solution for your objectives. It is also essential to avoid getting involved in too many concurrent partnerships. Focus on businesses that can help you move toward your goals.
3. Have Something to Offer
Ensure that you have something that the other business will deem extremely valuable. You need to be able to sell the benefits of doing business with your company, so create a pitch that highlights the reasons why you can help the other business grow as well.
4. Take Your Time
Don’t leap into a partnership. Spend time getting to know the other business owner(s) and fostering a relationship before considering big business ventures. Consider starting small, such as swapping email lists before moving on to more significant projects.
5. Ensure Fit
To avoid conflicts, ensure that your business philosophies and strategies match those of the other business. Thoroughly investigate any business you are considering partnering with.
6. Assess the Value of the Partnership
Evaluate the partnership’s successes and failures each month with the other business owner(s). Plan your next steps around what is going well and avoid repeating mistakes. Be willing to cut ties if the partnership is not beneficial for either of you.
7. Define Clear Objectives
Before you embark on a strategic partnership, it’s important to define clear objectives for what you hope to achieve through the partnership. This can help you identify the right partner, as well as determine the specific resources and expertise you need to complement your own. Some possible objectives might include expanding into new markets, accessing new technologies or intellectual property, or improving operational efficiencies.
8. Establish Communication Channels
Effective communication is key to any successful partnership, so it’s important to establish clear channels for communication and collaboration from the outset. This might include regular meetings or check-ins, shared project management tools or software, or even joint training programs to ensure that all stakeholders are on the same page and working toward common goals.
9. Invest in Relationships
As with any business venture, building strong relationships is critical to the success of a strategic partnership. This means investing time and resources in getting to know your partner, as well as building trust and mutual respect over time. One way to do this is to identify shared values or goals that you can work toward together, whether that’s supporting a common cause or pursuing a shared vision for growth.
10. Monitor Performance and Results
Finally, it’s important to monitor the performance and results of your strategic partnership over time. This can help you identify areas where you may need to make adjustments or pivot your strategy, as well as celebrate successes and milestones along the way. By continually evaluating your progress and refining your approach, you can ensure that your strategic partnership is helping to accelerate your business growth and drive long-term success.
In conclusion, forming strategic partnerships can be a smart and powerful way to accelerate your business growth, but it’s important to approach these collaborations with care and attention to detail. By following these tips and best practices, you can increase your chances of success and build strong, lasting relationships that benefit both you and your partners.