Nothing exists in a vacuum. Whether you’re running a small or medium business or head of a large company, you need to create business partnerships if you want to succeed as an entrepreneur. Even big companies need partnerships to boost their business. For example, ride-sharing pioneer Uber partnered with Spotify, the online internet music provider, to create a unique transportation experience for their customers.
However, business partnerships are delicate arrangements that need lots of exacting details to work out. Keep the following tips in mind when you’re considering approaching another business. This information will help you create a solid foundation for your partnership that will prove profitable and effective.
1. Avoid Personal Relationship Squabbles
Mixing your personal life and your business endeavors is never a good idea. When personal relationships get in the way of efficiency, you’re actively undermining the survivability of your enterprise. For example, it might lead you to choose to partner with a less-proven business run by a friend instead of a more successful company run by a total stranger.
This can be even trickier if you own or manage one of 5.5 million family-owned businesses in the U.S. You and your family members may disagree with certain business matters but don’t let personal preferences and squabbles affect your decision-making. Personal disagreements and squabbles have no place in business partnerships. Even if you find a business owner personally unappealing, you should assess their company’s utility to your enterprise before anything else.
2. Create Concise Contracts
Trust is the foundation of all partnerships and you can’t have trust without accountability. Your business partnerships need a solid foundation based on your contracts, which inform you and your partner on all responsibilities and obligations you have to one another. Keeping these contracts as free from any ambiguity and double-talk as you can is essential in ensuring you and your partner don’t let each other down.
For example, if you form a partnership with experienced sign supply distributors, your contracts need to specify what type of signs you want, when they need to be delivered, and if they should present their mock-ups to you. Concise contracts are also useful in case you need to go to court.
3. Partner with Complementary Businesses
Every business has strengths and it has weaknesses. Business partnerships help you shore up your weak points and make your company more efficient. Look for companies that can provide a service that’ll help your business work better and that you can offer them something in return. For example, if you run a media content creation company you can form a partnership with an electronics store that can provide you with the best budget laptops for video editing. Your company in turn can provide them with videos for their website for their marketing and advertising needs.
4. Encourage Business Growth
The best partnerships are like the best friendships: each participant encourages the other to expand and grow. When forming a business partnership with another company, monitor their development and see how you can use each other’s advances to your advantage. If either of your companies have expanded since you created a contract, see if you can renegotiate the terms to accommodate this growth and explore how you can utilize it to your mutual benefit.
For example, if you own a pizza-delivery company and have partnered with a flyer-making business, you can provide them with more profits if you expanded delivery routes, and thus need more flyers. On the other hand, they could give you more printed materials if they expanded their services to include posters. This will help both participating businesses get the most out of the arrangement and create a lasting relationship between your enterprises.
5. Ensure Transparency in All Things
Partnerships need trust, just like every relationship. And you need to cultivate trust by instituting protocols that encourage you and your partner business to be transparent in as many things as possible. This can prevent issues from arising when one of you finds themselves unable to fulfill their obligation to the other.
Say your company has run into an unexpectedly large batch of orders, and your manpower and resources are stretched thin. This can lead to your business being late in delivering product to your partner. You need to inform your partner business well before the due date about your situation, so you can come to an agreement about changing arrangements. Such transparency makes cooperation easier and helps strengthen your partnership.
Business partnerships don’t only help the participating companies, they’re also integral in creating larger networks that support the country’s economy. Learning how to create stable and profitable partnerships are key in improving the commercial landscape.