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Small Business Partnerships Fail!

Are you or your company going into strategic partnerships with another company? Entering into a partnership will allow you to reap numerous benefits without having to make large investments such as in acquisitions. But this only works if both companies are willing to share the burdens of the partnership. Advantages of entering into this kind of partnership are to leverage marketing, supply chain, technology, financial resources, or some combination thereof. Such an agreement might exist between a digital ad agency and a graphic designer, a hair stylist and a makeup artist, a photographer and web designer, or an Internet service provider and an email automation firm, just to name a few possibilities.

Simply put, companies enter into strategic partnerships in order to grow their business and bring more value to their customers while reducing their financial risks.

Benefits of entering into a partnership include: 

  • Strengthening Innovation
  • Public relations
  • Deeper and wider contacts within your marke
  • Adding more capacity to your business
  • Adding competencies and other skills to your business
  • Improved competitive advantage

Unfortunately, many alliances do not end on a happy note. More than 50% of all strategic partnerships end up leading to frustration, misunderstandings, and financial losses.

As I’ve noticed, many companies do not have clearly defined goals and expectations written down so that everyone involved knows what all parties are expecting. Without procedures in place for how the strategic partnership will operate, including what resources that you’ll invest, and what will happen in the likelihood that things will not go well.

Often, each party has their own purposes, desires, and expectations for the alliance. Therefore, there are as many agendas as there are partners in the alliance. The biggest challenges with strategic partnership are known as C.C.G.R. The 4 most significant challenges are Culture, Chemistry, Goals, and Rewards.

  • Culture– the culture between the participating companies
  • Chemistry– the chemistry between the persons who are to maintain the alliance
  • Goals– all parties must be clear about the goals of the alliance – there must be a strategic fit between them
  • Rewards– the partners are involved in the alliance for specific rewards.

It is a very bad foundation for a partnership if any information is held back. If your goals or motives are not shared with your alliance partner, you are setting the business arrangement up for failure. The problems appear when there are hidden agendas being kept secret. This will be the source of conflicts in the alliance.

How to have a successful partnership:

Depending on the size of your organization, you should allocate resources and staff for your alliance venture

Run the partnership professionally. Set up clear and distinct goals so that both parties know the purpose and goals of the alliance.

Have patience with your strategic partner. Big results often take time! You must learn how to work together, and trust must be built between you. Trust takes time. Don’t give up when big results do not appear from your partnership right away.

  • Be a good match. Do your due diligence to make sure your organization is partnering with a company with an excellent reputation in the marketplace. You must be headed in the same direction at matching speeds. Too many have tried to save each other by having the strong one take care of a smaller weaker company. That rarely works out well. There must be some sort of equality in the partnership.
  • Pick your employees who work on the alliance carefully.Make sure your team has the soft skills and professionalism to run such a partnership
  • Be honest. Create a method for communication and file sharing/project management software so that the partners are motivated to share knowledge and that all critical documents are in one place where everyone can assess them. Schedule weekly calls so that everyone can keep kept informed. Share experiences with each other. Thoughtfully discuss mistakes so that both teams may learn from them.
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