The Fine Art of Strategic Partnerships





Rob Levin, the Publisher of the New York Enterprise Report, writes about strategic partnerships, noting that people will often suggest a strategic partnership without a clear idea of what they want out of a partnership. His response is to draw the other person out:

Even if I do have an idea of how we could work together, I’ll still try to get them to speak first. The reason for this is that it is much easier for me to sell an idea to someone if they think that it is their idea.

Rob’s advice makes great sense. It also has the advantage of getting people as specific as possible, as fast as possible.

How do you tell when a situation is right for a partnership? The longest-lived partnerships occur where each party brings something to the table that the other lacks. Here are some situations when it makes sense to partner:

  • Partner when one business provides a unique or desirable product but lacks wide access to the market, and the other partner has a large customer base or access to the market but needs the product in order to round out its own offering or gain a competitive edge.
  • Partner when one business has a niche skill-set or provides a highly specialized service. Even businesses the size of Google and Microsoft can’t be expert in everything (just look at how many of their offerings are NOT market leaders). Often it makes sense to outsource a function to specialists so you can focus on your core competencies.
  • Partner where one company is trying to break into a new market or expand, and wants to keep its capital costs or staffing costs down. For instance, one company may offer a technology product and needs consulting help for a combined software/hardware/solution sale. Instead of hiring consultants, it might partner with a group of consultants who are already skilled and looking for products to rep. That way it keeps its headcount and staffing costs down.
  • Partner in government contracting situations. A larger company may partner with a smaller enterprise in order to qualify for certain contract set-asides for minority-owned businesses or small businesses. For the smaller company, partnering with a large corporation may be the only practical way to break into government contracting. Joint bids and subcontracting arrangements are common in government contracting.
  • Partner as a way of screening and evaluating acquisition targets. This is usually done by larger companies that have venture arms, or are aggressively on the acquisition path. It is a “try before you buy” strategy.

Read more about partnering.

4 Comments ▼

Anita Campbell


Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

4 Reactions

  1. Rob’s advice does make great sense. And I also believe that an ideal partnership is one that is shared 50-50, with each realizing that loosing the other – would result in a greater loss overall.

  2. Good advice. Also consider the other side’s personality style towards being creativity and entreprenuerial. These spirits are essential elements to ensure the both partner’s have an inward passion towards “driving” the partnership.

    It’s “Relationship Glue” that becomes essential in the weeks ahead.

  3. There are many good points in your article. I would like to supplement them with some information.

    For an all-volunteer site, dedicated to small businesses who wish to succeed in federal government contracting, please see the below site:

    http://www.smalltofeds.blogspot.com/

    The federal government will contract in excess of $80B to small businesses in the next fiscal year. There are over 50 agencies or “Departments” in the federal government. Each of these agencies has a statutory obligation to contract from small business for over 20% of everything it buys.

    Contracting officers must file reports annually demonstrating they have fulfilled this requirement. Not fulfilling the requirement can put agency annual funding in jeopardy. Small business has a motivated customer in federal government contracting officers and buyers.

    Large business, under federal procurement law, must prepare and submit annual “Small Business Contracting Plans” for approval by the local Defense Contract Management Area Office (DCMAO) nearest their headquarters. These plans must include auditable statistics regarding the previous 12 month period in terms of contracting to small businesses and the goals forecast for the next year.

    The federal government can legally terminate a contract in a large business for not meeting small business contracting goals. Approved small business plans must accompany large business contract proposals submitted to federal government agencies. Small businesses have motivated customers in large business subcontract managers, administrators and buyers.

    There are set-aside opportunities available for small entities,veterans, disabled veterans, women and minorities. All it takes is navigating the system, persistance, asking questions, registering, marketing, teaming and working hard.

    Small Business America is good at that.

  4. Anita Campbell

    Thanks, Ken. Good detail about the state of government contracting and what it means to small business.

    Anita

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