If there’s one thing I’ve been learning as a business owner, it’s the importance of choosing partnerships wisely. I’m not only talking only about legal business partnerships, but almost any affiliation your company can enter into. This means business partners, suppliers, sponsorships, employees, and even clients.
Over the years our company has been in business, we’ve been approached by many people for various opportunities. From profit-sharing ventures to vendors wanting a piece of the action—and everything in between. A few of them we’ve accepted based on the potential benefit it could bring both companies. We viewed them as true win-win scenarios—how could they possibly fail?
Well, quite a few of them did. But we learned something about each one, and over time, how serious a partnership really is. I’d like to share with you some of our experiences in a few of these areas.
1. Industry Partners / Co-Promotion / Co-Branding
Chances are, there are complimentary companies that can help you fill the gaps in your service and provide a better solution to clients. We’ve explored several referral partnerships like this, entered into a few, and only had a handful actually work well. Here’s what we found about these.
What We Thought Could Go Wrong: That customers would be confused about dealing with two companies, that our systems would break down during a project, that pricing projects would be complicated and time consuming, that there was too much overlap in services leading to conflicts.
What Actually Went Wrong: None of the above, in fact, because the most common problem was nothing actually happened with the partnership. There was not enough commitment from both parties to promote each other’s services, cross-train and collaborate to make it worthwhile. Most fizzed out after a referral or two.
How It Could Be Prevented: The biggest hurdle in an industry partnership is commitment from both sides to make it work. This is so important in fact, both parties ideally should sign a contract to dedicate the appropriate resources into the relationship, such as cross-training, development of co-branded marketing materials, and maybe even dedicating cash to co-op advertising activities. Whatever the agreement, there must be skin in the game and accountability for both sides to make it work.
Other Notes: Watch out for people who want to co-brand or joint-venture with you basically just to get free shit. This happens a lot. Make sure the investment is double-sided and truly a win-win situation. Asking for a more formal commitment helps to weed out the freeloaders.
Almost any company is going to rely on vendors for something or another, and this is the area you’ll likely have the most problems with. It’s certainly the most frustrating area for us.
Working with a vendor, you put your reputation on the line for every job. The problem is you can’t control what they do. If they doddle at providing quotes, mess up a job, or ship something late—you’ll be on the hook for the fix, not them. It’s not fair, but it’s reality. So you better be damn sure your vendor is working at the same level you are.
What We Thought Could Go Wrong: Pretty much anything.
What Actually Went Wrong: Pretty much everything.
How It Could Be Prevented: Carefully review potential vendors. Visit them and evaluate if their philosophies about service, quality, and business in general mesh with your own. Ask to see case studies, testimonials or other proof of their reputation and performance. Test them out on a small project for yourself before engaging them on important client projects. Beyond these points, I believe the relationship will determine the ongoing success. Building a strong relationship with your sales rep and other key personnel in the business will certainly help. Loyalty can also bring benefits and rewards such as preferred pricing and priority service.
Other Notes: Regardless of how thoroughly you evaluate your vendor partners, sometimes you’ll be in a situation where the vendor can’t be chosen. Maybe the vendor has a monopoly on a certain type of product, or maybe you’re in a smaller market where there’s only a handful of vendors providing what you need. This can be troubling when the majority are difficult to work with or don’t deliver consistently. In this case, you will need to carefully evaluate the job and whether you want to put your reputation on the line. If you do take it on, expect a lot of extra time managing the vendor relationship and following up, and potential problems with quality and delivery later. Sometimes it may make more sense to turn the job away, or in the case of a monopoly vendor, explain the situation diplomatically and refer the client directly to the vendor for that job. Going out of town isn’t always the best option either. It adds costs and risk because a third vendor is brought into the relationship: a shipping provider. This is a vendor you’ll have even less control over. If the timeline is tight, out-of-town might not be a great option.
We’ve sponsored a lot of organizations and initiatives in our community. We love helping others and giving back. But of all the sponsorships we’ve taken on, we’ve received a dozen more proposals that were denied. In this area, you’ll see all kinds of crazy stuff. From for-profit companies dangling “future work” carrots to try to get a deal, to quasi-non-profits operating in such murky waters that you need night-vision goggles to read their proposal.
What We Thought Could Go Wrong: Nothing! Giving back feels good.
What Actually Went Wrong: The most common was dealing with rude/self-entitled recipients who disrespected the amount of time and effort that was put towards their cause, and recipients who wasted our time by being extremely disorganized in dealing with us. My view is if you’re going to ask for help, (a) you should always treat the donor with respect, and (b) get your poop in a group. Of course, shit happens sometimes, but you should be at least relatively organized in dealing with a donor. It just boils down to respect.
How It Could Be Prevented: In 2011, we moved from a model where people approach us for help to a model where we select & approach them. At any given time, we have one major sponsorship going at a time. We research and select organizations that (a) we feel strongly about, (b) are managed well, and (c) really need our help. This allows us to spread the help around the community, work on what we believe in, and know that our investment is not going to be squandered. This has worked well for us and the organizations we’ve helped.
Other Notes: This is my personal view on things, but I won’t give out money over the phone. If it’s not important enough for you to take the time to visit me, it’s not important enough for me to get involved in. Every year we get a dozen calls from telemarketing firms to place business-card sized ads in calendars, maps and booklets. It may be an effective way to cover a lot of ground for the organization, but to me, it’s lazy, and creates a potential security risk for unsuspecting donors. How easy would it be for a scam artist to grab your credit card information for a non-existing publication? For this reason, and on sheer principle, I won’t consider a donation unless I can look you in the eye and shake your hand.
I’ve only covered a few of the partnership situations your business can engage in. There’s many more, and I may cover those in a later article. The moral of the story is, choose your partnerships carefully and for the right reasons. Also, good paper makes good friends (thanks B.L. for that line.) Make sure you use both to get the best results and create true win-win situations.