Are you an entrepreneur who needs a partner? If you are like most entrepreneurs, you have great aspirations for your business, but you realize it’s impossible to accomplish it all alone. Typically, the next thoughts include:
- “Who can I get to build this business with me?”
- “Who do I know that could be my co-founder?”
- “Who would be willing to work for free until I get things going?”
- And those are just a few of many thoughts keeping you up at night.
So here’s the deal: We are HUGE advocates of creating strategic partnerships. Why? Because the overall goal of strategic partnerships is to share resources to promote growth for all partners involved. Yes, it is an agreement between two businesses for the mutual benefit of both parties, but it doesn’t lock in your forever. It’s a contract with terms and limits and if the relationship doesn’t work, end it per the terms defined within the agreement. Keep in mind that a formal legal partnership can be automatically dissolved with the exit of one partner—much less fuss than being locked into a corporate entity or LLC and having to go through an official “divorce.” That’s the number one reason we suggest strategic partnerships over corporate structures for many of the startups and small businesses we work with.
There are various types of strategic partnerships, but there are certain types that are more advantageous and make sense when you’re a startup and others that make more sense when you’re a small business owner with a solid customer base and seeking growth. Each business has different needs so there is no “one size fits all” type of strategic partnership, but you can begin the process of narrowing down what’s best for your business by starting with these simple steps:
- Define why you’re seeking a strategic partnership and what’s the ultimate goal of it.
- Make a list of the requirements that a partner must meet to be acceptable (your acceptance criteria).
- Make a list of the expectations you have of a partner.
- Define what you are willing and able to provide in return to the partner (remember, this relationship is for mutual benefit).
- Define the “deal-breakers” or things that you will not agree to, tolerate, or consider in the partnership.
If you complete this exercise, you’ll be off to a good start in finding a strategic partner. Keep in mind that this is an iterative process, meaning you’ll broadly define the answers the first time around (although you may not think so at first) and then you’ll analyze and adjust as needed to achieve the ideal strategic partnership. And even after you’ve done all that, there will probably be more tweaking required during the actual negotiations with the identified strategic partner(s). Your attorney will officially help you seal the deal–there’s no replacement for good legal counsel. However, if you do some of the up front work yourself, you can drastically reduce the legal costs.
Here at TPM Focus, we understand that agility means everything in business. Things are constantly changing and you must be ready to make adjustments, as necessary, to sustain your business. Does that mean a strategic partnership is on the horizon for you?
Got questions? Need help? Reach out to us.