Creating partnership programmes can be a cost effective way of deepening relationships with customers and suppliers – as long as they have been designed to deliver incentives that benefit both parties equally and help programme participants drive growth in their individual businesses.
It can be tempting to view the decision to partner with another business as some kind of admission of failure. It is true that in some cases a business will find itself in such a precarious position that the only alternative to finding a partner is going under, but that is not the type of arrangement we are talking about here.
Where two businesses of roughly equal size find themselves doing a lot of business together (ideally with a fairly even division of value) it can make a lot of sense to pool resources without going down the road of a merger or acquisition.
Partnering with a business with which you have an existing relationship is clearly easier than looking for a new partner that can fill a gap in your service offering. But if you have identified a weakness it could be easier to tap into an established provider than trying to plug that gap in-house.
Don’t underestimate the importance of personality in your search. If you are putting business someone’s way you need to know that if there is a problem they will deal with it professionally.
It is also important to maintain regular communication, especially if one or both of the partner businesses is going through a period of change that could affect the way they work.
The partnership agreement can be as informal as a verbal undertaking to only use their other party for any of the services they provide. This is an appealing option because there is no legal agreement to be created and therefore no issues around breach of contract.
The most successful partnerships are those where the rewards are shared equally. This does not always have to be expressed in financial terms, but if one party is getting most of the benefits this will eventually create resentment.
Done right, the partnership will enable both businesses to grow their separate revenues and increase their long term viability.
One of the first steps in the partnership process is to assess the financial health of the other party. Businesses that use a cloud-based accounting solution such as Big Red Cloud will be able to demonstrate their cash flow position and other metrics quickly and easily.
They will also be able to assess the value of the partnership as it progresses. Not all the benefits of partnership can be measured in financial terms – like-minded entrepreneurs will enjoy bouncing ideas off each other – but it helps if they can point to increased sales or reduced overheads.
Non-financial metrics for measuring the effectiveness of a partnership include brand awareness and customer satisfaction.
As business becomes ever more fast-moving, it makes sense to seek partners who can help you exploit commercial opportunities or reduce risk.