You’ve already done everything you can to increase business efficiency, and, just when your competitive advantage is assured by your new capability allowing your customers to transact business online, another business you’ve never heard of announces a partnership with one of your strongest competitors. With a bigger competitor on the scene, there’s no escaping the fact that keeping your customers and growing your business will require you to take on a partner. It’s the first time you’ve given any serious consideration to sharing control of your business. It’s a high-risk proposition and you don’t know who you can trust.The theme to “Star Trek” starts playing softly in your mind as you begin to ponder going were no man has gone before. And then the music abruptly stops. You remember a list of very good reasons you’ve never gone there.
Choosing a partner can seem like an overwhelming decision. First, there’s the challenge of designing a business strategy that differentiates your business from the other consumer options in your target market – figuring out what product or service or pricing will deliver more value to your current customers and attract new customers. After you have a strategy on paper, there’s the process of determining the strengths and weaknesses of that strategy. A new strategy is of negligible value if 20 other businesses can “copy it” capitalizing on your hard work and robbing you of your competitive advantage. This may suggest you need a partner that is willing to an exclusive relationship.
When you are confident you have the right strategy, the search begins for a partner that is “a good fit” in terms of size and experience. “Good fit” is usually defined by what you’re looking for in a strategic partner. It may be that a smaller partner with a great product or service but with less experience in your market fits the definition if you are willing to provide training and increase the partner’s business revenues by exposure to your customers. It may be that another established business in the same market with a highly complementary product or service and clients that would double the size of your client base would be “a good fit.” Regardless of the strategy, in seeking a first-time partner, it’s always better to “test the waters” before making a full commitment. This could mean teaming up on one or two projects to see whether a strategy that works on paper works when it is “reality-tested.” Avoid partnering with any business whose financial strength is significantly greater than your own. Unless your business strategy involves becoming a reseller or selling your business as you exit, it’s never a good idea to team up with a stronger partner, exposing your business“know how” without any future commitment, and, at some future point,watching your“partner” walk away with your intellectual property, competing against you for customers you personally taught him how to attract.
It’s also important to remember that choosing a partner is not like choosing a friend. Never decide to just “go with your gut.” It’s altogether possible that a prospective partner who has a great personality and considerable financial assets could be bankrupt when it comes to personal integrity. In business circles, the old adage is still true – “Birds of a feather flock together.” The upstanding business reputation that you worked so hard to develop could be forever tarnished as a result of one unfortunate association.
Short of hiring a private detective, how can you spot a bad candidate? Know the warning signs. Walk away from anyone who:
- Agrees to discuss a business relationship but avoids signing a non-disclosure agreement, who insists that the only“confidential information” must be in writing, or who signs a non-disclosure agreement and then violates it.
- Is your guest at an important event and drinks in excess – disrespects you and is a liability in relationship-building.
- Exaggerates about business contacts, clients, past accomplishments, etc. – bragging about one’s own success is usually perceived as arrogance when it’s true, and when it’s not true, can only damage business credibility
- Is forthcoming with adverse information only when confronted with hard evidence – sign of a person who avoids truth-telling or owning up to mistakes.
- Does not acknowledge you or your business success in public settings – sign of a competitor not a collaborator.
Trust is earned over time. So, until you’ve had an opportunity to get to know the individual you are considering as a partner, trust – but verify.