Many at times I have been told of how partnerships form a key ingredient that ensures for the smooth flow and success of any business venture. Indeed, partnerships are critical for start-ups who usually encounter unique sets of challenges which need more than just tact in handling them. Luckily the business model canvas allows having a thorough assessment and appreciation of partnerships that will stand by you to tackle obstacles as they arise. To this effect, I have always wondered if there was a standard way of choosing the best of all possible partners to walk within the start-up journey. In this article, I take a closer look at what it means to have partnerships in business as I try to briefly explore some ways in which start-ups can forge reliable and sustainable partnerships.
What is a business partnership?
Partnerships in business refer to that network of suppliers and committed entities that help to make any business model functional. As with every business model, there is always a need to minimise risks while efforts are made to ensure that resource utilisation is optimised to guard against wastages. Therefore, as a small business owner, it becomes important that you understand what partners can do for you in your business. The first step towards this is achieved by asking yourself as to what role is being played by your current partners. If you have never thought of your business along these lines you can begin by enquiring on persons and organisations that have been giving you all that you need for your business model to be functional. From this exercise, you should be able to appreciate these entities largely because they have been critical to the success of your business.
Perhaps you have built business relationships without looking at them as long-term partnerships for your start-up. Well, now is the time that you would want to have committed business partners from the relationships you have built. Therefore, as you gravitate towards strengthening and transforming these business relationships into partnerships it will be beneficial if you also enquire on the motive behind your current associates` agreeing to your relationship-building gestures. Over and above, partnerships should provide mutual benefit and you would not want a situation where your perceived partners are only there to exploit and take advantage of you.
What follows below are some of the most common types of partnerships business people usually engage in. You should find a good starting point in defining the type of partnership you want to forge with your associates.
Buyer and Supplier Partnership
This partnership is largely founded on the principles of supply chain management. You could be a business owner into manufacturing, and you always want a situation where you will readily get all your inputs without failure. Not to mention a chance of getting the same at discount prices. The quickest way to get to this point is by identifying the best entities or persons with whom you can form a buyer-supplier relationship. However, in forging this partnership you need to be aware of the fact that successful buyer-supplier partnerships are sustained by effective two-way communication. Since you are the one looking for a partnership it is encouraged that you promote communication that is open and direct. Open and direct communication in business is critical as it guards against misunderstandings while it ensures that issues are solved as quickly as they arise.
A successful buyer-supplier relationship is further strengthened by a far-reaching respect for the other party`s line of business. From respect comes a growing desire that fairness is upheld by each party. Such an arrangement in this partnership will make it easy for each partner to get more profits and benefits from the arrangement. Hardly will there be instances where one party feels like they are not getting a fair deal.
This partnership always results when a small business owner identifies an opportunity which he/she cannot exploit individually. A small business owner might be desirous of establishing a broiler business and has all the necessary capital but lacking appropriate land. In such a situation a joint venture with someone with access to land and has a far-reaching interested in broiler production is always the next thing that arises.
Joint-venture partnerships usually result when two or more business persons combine their resources to meet a specific objective. If you so choose to be in a joint-venture type partnership it is encouraged that members be open about their contribution, management of risks and how income and expenses will be handled. Some would opt to have a joint-venture agreement crafted. The agreement will have to highlight how interested parties will relate to the business. However, one should also be aware of the fact that joint-ventures quite often result when business-minded people probably having different broader objectives are brought together by a seemingly common interest. Therefore, it is also encouraged that effective communication is upheld at all times by interested parties.
Strategy in business is important and at times a business owner will be faced with a situation where a strategic partner has to be sought. Quite often, startups face challenges in penetrating new markets and as a result, they court the alliance of someone with in-depth knowledge of and influence in the set market. The most common strategic alliance formed is working with advertising agencies. I also like how some businesses engage public figures as a means of creating brand awareness which assists them in penetrating and making an impact in new markets. Strategic partnerships are important for small business as they assist in amplifying efforts made usually out of constrained resources.
Partnership with your competition
Competition can be tough when you are just starting up, but did you know that you can also find ways to turn a competitor into a partner? Partnering with your competitor is a strategic move that small business owners should know how to handle. Instead of complaining about how your competition is keeping you out of business try to find a way in which the two or three of you can seat at a table to discuss an issue of interest to all of you. You can angle for a joint social responsibility campaign or agree to create ways to assist the vulnerable in your market area. What you want is a situation where you can work together as a team but the extent to which this will overspill into how you will engage and interact in business largely depends on your ability to manage the engagement escalation. But just having the two of you working together is enough to begin forging a partnership with your competition.