Business Matchmaking – Five Signs You’ve Picked the Right Partner
The following guest post is provided by Hobsons' Director of Business Development, Dean Chen.
Partnership – it’s a great word. A stock image immediately comes to mind of people happily collaborating to mutual success.
When I talk with colleagues within my company and at other organizations, everyone seems to understand the importance of partnering. But it wasn’t until we started to execute on our partnership strategy that I started to realize the risks and perils of choosing the wrong partner.
Here are five signs to watch for to ensure you’re joining forces with the company that’s right for you.
- Motivation - The most important factor is to understand why a company needs to partner with others and vice versa. You need to go in with your eyes open.
While the motivations can vary, I see them falling into four categories. Those are Brand, Operations, Distribution, and Solution (BODS). That’s right, to pick the right partner you need to look for nice BODS!
a. Brand is pretty straight forward. If one partner’s brand is stronger than the other’s in a specific market, you can execute faster by leveraging the wider known brand.
b. Operations is a bit more complicated. Look for the right partner to enable you to reduce complexity in operations, reduce expenses, or scale more efficiently.
c. Distribution is one of the most common reasons for partnership. If a potential partner has broad reach into a market, you can leverage that reach to quickly develop and promote new products or services. This decreases time to market, increases likelihood and rate of adoption, and lowers the cost of building a distribution channel internally.
d. Solution can mean an actual product or service offering or just sharing of data. If you are lacking an offering that your clients demand, and you don’t have internal resources to develop the offering, then it is often easier to find partners who can solve those problems than to develop the solutions in-house. This would also apply if sharing data is the solution.
2. Product - If you are evaluating a partner for an integration, you would need to keep in mind the user experience. For example, in education, for a long time and still to this day, many companies believe the best experience is for a user to login to its platform first before accessing a partner’s, similar to a portal concept. However, as Facebook has shown, you don’t need to do that to integrate products. A company can simply have a widget that partners can embed to facilitate single sign on and data exchange.
3. Financial – More marriages fail due to financial issues than to infidelity. It’s the same in business -- It’s important to understand how partnership revenues and expenses can be treated under accounting policies, especially if there are any tax consequences. For example, the revenue treatment can differ for referral (no inventory) and reselling models (holding inventory). If you work with a non-profit or an international organization, multiple tax ramifications must be addressed.
4. Alignment – Typically companies join forces to drive sales, create product, or gain operational advantages. But it’s easy to get off the track. Without top-level business-objective alignment, the partnership can be doomed. Each may be actively pursuing the ‘partnership’, but could really be moving in opposite directions if their mutual end-state isn’t clearly defined.
5. People – Partnering is exciting, and usually everyone is optimistic at the start. Everything might look perfect on paper, but ultimately it’s the relationship between people at partnering organizations that is key to success. Ask yourself -- do I like these people, is there a culture fit?
The stakeholders must get along at a personal level and keep a constant and open communication channel. Just like in marriage, a successful partnership depends on collaboration and trust. Of course that’s a big enough topic for another full article!
Just remember, take a hard look at the signs above before you take the partnership plunge and you won’t regret it.