The Benefits of Strategic Partnerships
I once knew a man who owned a small consulting shop in Miami. In fact, he was one of the first consultants I met, a maven with Oracle and other database apps. He was tall and wiry and utterly given to his business, which he’d kept alive through a recession and a hurricane (the former, he assured me, was by far the worse).
“How’d you do it?” I asked. “How’d you keep everything going?” At the time I was a new consultant, and I had trouble making ends meet. Hence I remember his answer: “Good partners,” he said. “We throw each other loads of work.”
It was my introduction to the notion of strategic partners, firms in complementary fields that can build your bottom line—if, of course, you build theirs as well. In truth, a strategic partner can mean anything from an occasional source of income to someone who’s got your back, day after day, in the trenches, a way to keep your business afloat or ratchet it up to the next level.
The question, of course, is how to choose one, and once you have, how to make the most of the partnership. Should you find a business in the same field or a different one? In your town or across the globe? Your size or two, three or four times as large? The answers, of course, depend on you and your business. They depend on your plans. And ultimately, they depend on your needs.
The first question is simple: Who can help you the most?
By and large, you should look for partners in complementary, not competing, lines of business. If you’re a networker, find a Web site designer—their clients will always need to lay cable or install a few servers, and creative types don’t like to be bothered with technical questions. If you design pretty Web sites for a living, find a networker and make him your friend. His clients will always need Web sites, and they’ll ask him where they can get one. The point is simple: Get together with people and firms who can throw you some business. In return, you’ll point clients to them and keep the partnership active.
That said, there’s some virtue in knowing the folks in your field (and knowing them well enough to do business). If you’re a small consultant in a market with big players, make sure they know who you are. From time to time they’ll give you overflow work (work they’re too busy to handle themselves, but need to get done) or jobs too small or niggling for them to make a profit on (but just your size). If they lose personnel, it may lead to a job offer. After all, it’s better to hire someone you know than someone you don’t.
Most of your partners will be local—as consultants, much of our work is tied to the city or state we live in. But if you have a sought-after specialty that’s hard to find (for example, biometrics or high-end security), don’t be afraid to find partners from all ends of the globe. The more specialized your work, the more likely you are to build a client base that crosses borders.
So how do you find a strategic partner and propose a partnership? It’s not as hard as it sounds, though it does take finesse.
First, start with the phone book. Open it up and make a list of all the firms that fit your needs. Depending on the size of your market, you’ll have somewhere from 10 to 50 prospects, and the fewer the better—you’ll need to vet each one carefully, and that takes time.
Next, do your homework: Check their Web sites, read their brochures and learn as much as you can about who they are, what they do and who they work for. Compare their client base to yours, and find out whatever you can about key personnel. Last—and perhaps most important—check their reputation. Remember: You’re choosing a partner, so you can never, ever be too careful.
With your research done, you’ll winnow your list of prospects down to a few good candidates (five at the most) that match your needs to a t. Now it’s time to get on the horn and find a contact inside the company. If your potential partner is a one-man shop, you’re in luck: Just call him up and introduce yourself. (If you have a mutual friend who can introduce you, all the better. Remember: It pays to work the Rolodex.) Once you’ve met, take him to lunch and see where things lead.
If, however, you’d like to partner with a firm with dozens, or even hundreds, of hired hands, try to find the best person to approach inside the firm. Bear in mind that it’s not always the man or woman at the top. In fact, the head of product development or VP for business strategy may be the right person to call. Just be sure to choose carefully: The right contact can make or break your chance of success.
Once you’re in the door, make your pitch and make it worth their while. What can you give them? What can they give you? Can you share personnel, ideas or strategies? Do you have clients or contacts they want? Do they have something you need, like equipment or leads? If you’ve done your research, you’ll have natural synergies that make the deal attractive to both of you.
Cut the Deal
When it’s time to put it on paper, be sure to do it right. This means a contract or, at the very least, a letter of agreement. Let’s say your new partner is a one-man shop, like you. In that case, a simple letter that outlines your arrangement will suffice. Both of you will sign and keep a copy.
If, on the other hand, you’re doing business with a large firm, be sure to have a contract drawn up by your lawyer. It should state, with some level of precision, the exact nature of your relationship and the obligations each has to the other. Will you give them a referral fee for new business? If so, how much? Is it a flat rate or a percentage of the gross? Is there a bonus for certain types of clients? And so on. The more you commit to writing, the less there is to fight about.
What’s more, you need to protect your intellectual property as well: your copyrights, trademarks and patents. If you’ve written a killer piece of software that makes your new partner’s hardware work better—and more attractive to buyers, by extension—be sure that your contract protects your rights to the code. If you own the rights to a domain name that you and your partner will jointly market, make sure that’s clear in the contract. If you develop new products together, who gets to own them? How do you split the profits? Who pays for the marketing? These are thorny, tricky issues, the kind a good lawyer can help you with.
Last, be sure to leave yourself an out clause. If for some reason the partnership falters—if you don’t get along or worse, get into court—you’ll need a way to legally terminate your agreement and move on. While it may be cynical, it’s wise to plan for the end of a partnership at the same time you plan its beginning. In the end, safe is always better than sorry.
Get to Work
With the paperwork done, you’re ready to road test your new arrangement. Just be sure to start slowly. Choose a small project—a simple client, a quick job—to use as a test case. Do you get along? If not, can you fix the problem with no hassle or fuss? Often the smallest of jobs can reveal the largest of problems, and it’s best to know them now, before you’re in too deep.
If the first project pans out, move onward and upward. Use each project as a way to make money and contacts, and to grow your arrangement and business as well. After all, a strategic partner can mean the difference between strong, stable income and nights of sleepless worry.
In times like these, that’s more than good business. It’s good sense.
David Garrett is the former director of Information Technology for GMP Companies Inc., a biotech with global operations, and the director of new media for Run With It, a site design firm. You can e-mail David at firstname.lastname@example.org or visit his Web site at www.garrettsattic.com.