How to create partnerships that can help your business grow
Posted: Thu 4th Aug 2022
Partnerships can help businesses innovate, reach customers and create opportunities. As the proverb says, 'if you want to go quickly, go alone. If you want to go far, go together'.
We spoke to Enterprise Nation members who have set up partnerships about what's worked for them and how to manage the relationship.
Building partnerships to create new products
David O'Coimin, Enterprise Nation member and founder of Nook, looks for partners that can add unique features to its pods. The goal is to offer customers new products and develop relationships with partners that can sell their products.
"I love a good partnership, especially around innovation," said O'Coimin. "I created Nook to be a minimum viable product. We know if we just add a particular feature it would be unique. Our partners do that and then they're out there selling it exclusively. Then we're all doing well out of it. It's not a passive revenue, but it's lower effort. You give some margin away but you can scale."
In one instance, Nook incorporated Acendo by Harman's video conferencing technology, dramatically changing the features of its products.
Generating revenue from partnership referrals
Jodie Scott launched Hubudio in April and is working hard to build its sales pipeline from scratch, particularly for repeat business.
Scott said referrals play an important role in the sales process and he looks out for companies with complementary offerings. Scott met Keel Over Marketing's UK director and Enterprise Nation member Simon Smart at a recent Enterprise Nation event in Bristol and the two companies agreed a partnership shortly afterwards.
"It's down to that realisation of 'can we help each other?' Sometimes you have a lot of conversations and it's great to have a chat, but with Simon it was a case of 'can we help each other now?' You need to be transparent on whether you can help.
"We pretty much signed terms when we got back to our desks the next day. We had a brief conversation to reiterate what we had discussed. We had some stuff that came through that week. It was really just timing," he said.
Smart added that Keel Over Marketing has set up referral relationships with a number of business partners.
"Referral partnerships are a cost-effective way to reach a new customer base and fast tracking the sales cycle without expanding your sales and marketing efforts," he said. "When a client has a certain need that we can't provide for we introduce them to the appropriate referral partner. If we know what our client's needs are and how large our clients' budgets are we know which referral partner can help."
Sharing expertise between businesses
It's difficult for small businesses to employ staff to cover every type of expertise that would be useful. Creating partnerships to share expertise is a great way to solve this challenge and make sure everyone working on the project is really bought into it and incentivised for its success.
Are you good at PR but lack the know how to design promotional material? You might be able to find another founder that's willing to swap time helping you understand these tasks or actually carry out the work. If the arrangement goes beyond a mentoring sessions, make sure you clearly define what each party's going to get out of it.
The same goes for your employees, who may benefit from being seconded with another company. If you do go down the route of a formal secondment, it's important to get the right paperwork in place.
Employees normally receive a letter setting out the terms of a secondment and a contract is drawn up between the two companies. It's possible to find templates online or you might want to work with a lawyer. Secondment contracts should include:
Expenses such as relocation
Who is responsible for paying the employee
The length of the secondment and process of ending it early
Who manages discipline, appraisals and grievances
In both documents, it's important to make it clear that the employee is still employed by the original company.
Setting up partnership agreements
Hubudio and Keel Over Marketing agreed a fee for referrals and set out the terms of the arrangement in a partnership agreement.
"In general in business, you need to make sure everyone's on the same page and is protected. Not in a negative way, every business decision starts with positive light, but I always try and get some terms in place so everyone's protected. It also means I'm sticking to my service-level agreements," Scott said.
Service-level agreements define how services are delivered and the standards the provider is obligated to meet.
It's common for the two companies involved in a partnership, particularly if it involves sharing revenue, to create a contract setting out the terms. This can include:
The details of each company
Payment terms
Signatures from both parties
Terms and conditions
Brand positioning
Cancellation procedure
Building trust with partners
It's important the business you partner with has complementary values. Customers will judge your company and product based on the way they behave. Make sure you have a feel for the brand, the person you're working with and the perception customers have of them.
When you get the right partnerships in place it can have a fantastic impact on the business. Not only can they provide a new route to market and an opportunity to innovate, but you get to work with another small business owner who's closely aligned to your way of thinking.
"Partnerships are key. You need to try and forge great partnerships. Otherwise, it's a long old journey on your own. If I've got other people that can refer people to me it makes the job a lot easier," said Scott.
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