Profits and Perils of Partnerships for Start-ups
Recently, I gave a presentation to a group of entrepreneurs, students, and faculty at Texas State University called “Profits and Perils of Partnerships for Start-ups“.
I was lucky enough to facilitate a couple of members of the healthlaunchpad Connect community, on this topic.
Also in another collaboration session, Brant Roth and Chris Bell gave an excellent talk on the topic. I then expanded on their insights about partnerships and structuring agreements.
So, to have a full grip on all the insights I shared, you can watch the full presentation from Texas State in the following video.
Summary On Building Partnerships
Partnerships can be one of the most effective strategies to accelerate growth and profits but they are hard to do well.
I covered:
- The benefits of partnerships
- Types of partnerships to consider
- Challenges in making them successful
- How to approach partnerships
Benefits of Partnering
- Staying focused to ensure that you remain on the right track
- Reaching inaccessible customers in order to expand your brand presence
- Scaling revenues
- Cost reduction
- Scaling supply chain for enhanced sustainability
- Competitive advantage
- Improved or new customer experiences
- Risk mitigation
- Cost reduction
- Innovation
Categories of Partnerships
Business Partnership Agreements
Generally, a partnership will help you and your partner grow your revenues while lowering your costs. For example:
- Hubspot’s agency, sales, and integration partnership program
- The sales and marketing agreement between Abbot India and Zydus Cadila
- The agreements between Toyota and Aston Martin and Toyota and Lotus
- The way Texas Instrument supports hundreds of technology firms
- How Bank of Ireland has outsourced eLearning to Accenture
Technology Agreements
Help you and your partner improve your product offering or close a technology gap so as to reap mutual benefits. For example:
- Coca Cola and Heinz’s partnership in order to create more sustainable bottles
- The agreement between Kaiser Permanente, a great call, and Best Buy to create a lively product for seniors
- Cerner and Induction Health’s deal to create a better patient engagement solution in the UK
- Uber and Spotify’s integration of music and ride-sharing experiences
- Apple and Nike’s strategic partnership to create Nike+
Strategic Agreements
These are long-term, broad-reaching partnership, including a new corporate structure.
How to Structure Partnership Agreements
Typical Challenges
- Lack of alignment
- Loss of control
- Lack of executive support
- Commercial or financial quarrels between or among partners
- Interpersonal issues
- Customer ownership
- Intellectual Property (IP) issues
- Exclusivity
Success Factors
- Crawl Walk Run
- Start with referrals
- Have Mutual Value Proposition – “What’s in it for them?” goes first
- Get clarity and definition on:
- Value proposition
- Deal structure
- Process (e.g. lead registration)
- Roles and Responsibilities
- Escalation
- Get executive buy-in
- Have reviews
- Develop a process, strategy, and evaluation criteria
So, if you need help with your market entry strategy, please, don’t hesitate to contact us for a short discussion.
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