A strategic partnership is the coming together of two businesses on one mutually beneficial project or goal. An example of this would be an owner of a craft store partnering with artists. The artist needs a place to display and sell their work and the craft store is looking to draw in more customers. This partnership can also spill over into marketing opportunities where the artist or the craft store can go to a craft show and market for both entities. This example is a little simplistic but it shows how two businesses can work with one another to not only benefit the other entity but benefit your own business too.
There are three aspects to creating a solid strategic partnership. These relationships need to have mutual respect, some lead time, and balanced contributions. The businesses need to respect one another is obvious and needs little explanation. Lead time is also important. Knowing who you are partnering with, what they can bring to the table and them having that same comfort level with your business will ensure that the partnership will work out.
Balanced contributions is a more difficult factor to quantify. Often times businesses view contributions purely in a monetary aspect but often times it is impossible for dollar figures to be equal. Contributions can come in the form of the amount of risk, the amount of work, etc. Think about the above example of the artist and the craft store. The craft store is giving up floor space it pays rent for. The craft store could easily view this as it is the party that is putting up all the money. But if the craft store is gaining exposure at 4 more craft shows per year and gaining 10% more foot traffic because of the work the artist is providing isn’t there a balance in contributions?
Strategic partnerships are great assets to your business because they allow you to expand you presence without doing a lot more work. The important thing to remember is not only vetting the partner (through the aspects discussed above) but also ensuring there is an agreement that allows both parties to clearly define what the partnership will entail. Without defined terms, a simple communication error, can ruin what would great partnership. Your small business attorney can help you draft this agreement and also to avoid any other potential pitfalls.
Source: “Cirque du Soleil and MGM Mirage: A Lesson in Strategic Partnership” by Margaret Heffernan of Inc.com