NFIB

Strategic Partnerships
10/ 25/ 2002

by Vicki Gerson

Business partnerships work when the alliance helps both businesses accomplish their goals, and they can help your business grow quicker. They can also be a hassle if you form an alliance with an ill-suited partner. Here are some important points to remember before you commit.

Define what you need in a partner.

Before you connect with someone, plan ahead. Specifically define what traits you are looking for. Each partner must specifically spell out his or her expectations for strategic alliances to work. If the expectations are too far apart, the alliance won't survive.

Do your homework.

Before you form any alliance, be sure to check the potential business partner's credit rating, financial reports and reputation in the industry and the community. Always trust your gut feelings--if something just doesn't feel right, don't form the strategic partnership.

Is there synergy?

When the two companies work together, it should add up to more than either does separately. Any alliance that aids only one partner is unlikely to last.

Set precise goals.

It is important when the alliance is formed that precise goals are established by all the strategic partners. It is also critical that the goals are established in a legal document. This document should also spell out how any disputes will be resolved.

Work out a management strategy.

Alliances just don't successfully survive without partnership management. Decide how you will communicate with each other and how often you will meet.

A word of caution...

Be careful what you share with your partners. Don't give away any secrets that are central to your business. You may not want to share customer lists, marketing strategies and product information.

It's also important to have an exit strategy. When you form the alliance, make sure a legal document spells how or why the alliance will end.

If you’re looking for potential strategic partners, one of the best ways is to network at association events, conventions or trade shows. A strategic partner may be found among suppliers, competitors or other professionals.

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