STRATEGIC PARTNERSHIPS FOR BUSINESS GROWTH
A strategic partnership is a formal alliance between two or more companies, whereby a contract is prepared for this specific purpose stating the terms and conditions of the partnership.
Companies form a strategic partnership when each possesses one or more business assets that will help the other.
These partnerships could be created, for specific projects and they may have a specific duration or time frame.
Why Form Strategic Partnerships
It creates avenues whereby wide range of opportunities become available to the companies involved in the partnership. Firms taking advantage of strategic partnerships can utilize their individual company’s strengths to make both firms stronger in the long run.
An example of a common strategic partnership involves a supplier / manufacturer partnering with a distributor or wholesale seller. The two companies form a closer relationship where they participate in advertising, marketing, branding, product development, and other business functions.
QUOTE from a Wise Man:
“Why avoid partnering with other companies and have low business patronage or 100% of nothing, when you can embrace strategic partnerships and enjoy several business opportunities and higher patronage.”
How to identify a Good Partner
- He must share your vision and must have integrity.
- He must contribute something to the business. It could be cash, “sweat capital” or their skills/expertise.
- He must be willing to participate in some/all the activities concerning the running of the business.
Characteristics of a Good Partnership
- A memorandum of understanding (contract) is drafted by a lawyer and signed by the partners.
- Roles and responsibilities of the partners are clearly outlined.
- Ratio of profit sharing is agreed and outlined in the contract.
- The duration and nature of the partnership in outlined in the contract.
- Periodic review/audit of the status of the partnership is clearly stated and documented.
- Exit strategy and buy out terms and conditions for any partner no longer interested in the business, must be properly spelt.
Benefits of Strategic Partnerships for Business Growth
- The companies have regular flow of business activities more than companies that do not subscribe to partnership arrangements.
- Shared cost implications.
- The companies involved enjoy a win-win relationship.
- They share the risk involved in executing any project. Thereby minimizing the risk.
- Increased operational efficiencies.
- Expanded access to the knowledge and expertise required in project execution is gained.
- Improved understanding of challenging issues and sustainable solutions
- Better understanding of the nature of business operations
Just like the common proverb says “Two good heads are better than one” so also is Strategic Partnership for Business Growth beneficial to companies. So, try having a strategic business partner, soon.