4 Tips to Go Further, Faster with Strategic Partnerships
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While some entrepreneurs may be hesitant to partner with other companies due to fear of misalignment, not a balanced relationship or a branding disaster, it can actually be quite beneficial if done correctly. Forming the right strategic partnership can increase your efforts in two essential areas of the business -- credibility and distribution.
Less than a year ago today, the company I co-founded Porch.com -- a home-improvement network -- had only touched the hands of a small group of our earliest employees, as we worked away from the basement of my rental home. Now, that same little website has touched millions of hands and this growth helped us form a strategic partnership with Lowe's Home Improvement stores.
The Lowe’s partnership spring-boarded Porch into the public spotlight, aligning brands and establishing us as a tech-savvy innovator in the space. It also gave us distribution to quickly deliver our product.
For those thinking of forming a partnership, here are a few pieces of advice:
1. Identify opportunities. Any company can come up with a list of the top 100 partners they would love to work with in an under an hour.
The trick is to identify what you can offer and align these incentives with a company that fills one of your needs. Look for companies that might be able to bring in valuable customers, credibility or links, among other resources. The key is looking for a partner with a matched vision and wants more than just a transactional relationship. Chances are you are going to be working closely with these companies for extended periods of time, so it’s in everyone’s best interest to make sure the spirit, vision and culture are all aligned.
2. Use partnerships to build momentum. Whether you are talking to customers, investors or other potential partners, you need credibility to gain leverage. Latching on to a bigger, well-known brand through a mutually beneficial partnership is a way to quickly build your own brand and credibility. Plus, your company can use the momentum gained from one partnership or deal to leverage another.
3. Make sure you have the required resources. Like any major function of your business, you need to allocate first-class resources to your partnerships. This means that both sides need to have the capital, people power and leadership in place to be able to devote time, energy and money into the partnership. Make sure your company fulfills these obligations.
That said, be aware that a majority of partnerships won’t exactly pan out the way you want them too. Needs change, company’s pivot -- it just happens.
4. Negotiate your terms and stay the course. Often with young startups in relationships with larger, more established companies, the bigger business uses its weight to get what it want. This leaves the smaller company in an uncomfortable position where they can lose track of their own growth. Don't let this happen to you.
It is essential to make sure the deal is structured in a way that lets you maintain control of your company.
As a general rule, it’s best to stay away from granting exclusivity to one company or another. You don’t want to paint yourself into a corner that you can’t escape in the long run.
I always evaluate partnerships pragmatically, taking them on a case-by-case basis. If the partnership fits, incentives are aligned and the cultures match, you might be on the cusp of securing the big partnership that takes your company out of the basement and into the world.