When you are an up-and-coming company, investing time and effort into strategic partnerships will help you achieve the level of success you want. I have been working on forming this special type of alliance for my own company since I started it in 2004, and it has only served me well. If you are a new entrepreneur, you might be wondering what a strategic partnership actually is, why it's important and how to form one. This is one of my areas of expertise that I hope to simplify for you.
What They Are
A strategic partnership is an alliance you form with a larger, more established organization. If you are new to a specific field – that is online payments in my case – you need a big brother of sorts to help you out. As the new kid on the block, you may not have the experience, money, reputation or know-how to really carve out a niche for your company; a strategic partner can help you achieve this.
Why They Are Important
Strategic partnerships are important for a host of reasons, but I will cover only the top three:
- Money. As a newbie, you might not have all the money you need to get where you want to go with your company. Sure, you could seek outside investors, but you'll spend more time convincing them of why to invest than you would in making your product worthy of investing. A strategic partner has the money, but do not make this the only reason for forming your relationship.
- Reputation. A bigger organization has a more established reputation, as well as the credibility to help you out. Your company might not employ as many experts as would a bigger company, so this is another driving force behind seeking a strategic partner.
- Expertise. An organization with a lot of knowledge of the field and the requisite skills will be a really big asset to your company. If you sell educational software, try to partner with teacher and educator associations to find your way into schools.
How to Form Them
- Offer a great product. One of the best ways to form an alliance is to offer a unique product that will benefit your strategic partner in one way or another. You provide the product, and they offer the distribution channel. What's in it for them can be discussed when drawing up a contract, but they will surely expect a percentage of your profits.
- Protect yourself. Before partnering, you will want to protect your product with a trademark, trade secret or patent. Your product is your intellectual property, and you should do everything you can to keep it that way. An attorney who specializes in this can help you with all the details and paperwork.
- Do some research. Search high and low for the right strategic partner. Study their line of products or the services before approaching them to make sure they are the right fit, and can actually benefit you. Look for a partner whose product or service complements yours rather than competes with it. And make sure your potential partner is in good standing with its public and its financial partners; you do not want their problems to reflect negatively on you, so look for a clean slate.
- Draw up a legal agreement. After you have found a good fit for a strategic partnership, you will have to start thinking about your legal agreements. Use this component of your alliance to your advantage by having an "out clause" if they fail to deliver the agreed upon performance criteria. Again, get a good attorney to help with this.
If you wisely invest your time and energy into forming a strategic alliance with a reliable and successful organization in good standing, the returns can be substantial. With the right partnership, your product will have a far better distribution reach than it would have if you did everything on your own, your revenues will increase ten-fold, and you will be able to dedicate your precious time to your core expertise while yours partner takes care of everything else.