Entrepreneur
I understand firsthand the power of strategic partnerships. Our firm was fortunate during the pandemic in that many businesses were expanding their workforce to include more remote workers. The geographical dispersion of these employees meant that the companies hiring them needed to register their payroll in several new states. My firm specializes in expediting registration processes like this. To better handle the high volume of incoming business, we secured large-scale strategic partnerships with payroll processing companies such as Gusto and Intuit. These partnerships allowed our business to experience 200% growth over the course of a few short years.
Perhaps this is why, at the start of each new year, I block out some time to reflect on strategic partnerships for my business, those I’m considering, those I’m pursuing, as well as those that I’m actively maintaining.
I endeavor to be as much of a doer as I am a dreamer, and good partners are the bridge between the two.
Related: How to Use Strategic Partnerships for More Explosive Growth
What is a strategic partnership?
Strictly speaking, a strategic partnership is a relationship between two business entities that purport to provide one another with one or several advantages.
Microsoft, for instance, is a corporate enterprise that acquires partners by the thousands. There are software companies that Microsoft promotes on their platforms. Microsoft benefits from the expansion of their technological ecosystem, and their partners benefit from a market reach they could never achieve on their own. Microsoft maintains separate partnerships with OEMs that build products pre-installed with Microsoft (and its partners’) software.
On a smaller scale, your local accounting firm may form a natural partnership with one or more bookkeeping businesses. The accountants’ work volume may be so high that they can easily fill their days with higher-level CPA-worthy tasks while allotting the more menial bean-counting to their bookkeeping partners.
Five types of strategic partnerships
When I’m assessing my current partnerships or advising a client on their own, I think in terms of five categories: Marketing partnerships, supply chain partnerships, integration partnerships, financial partnerships and technology partnerships.
Marketing partnerships: In the summer of 2024, the McDonald’s Happy Meal toy was one of several figurines from Disney’s Inside Out 2 feature film. This is an example of a marketing partnership between McDonald’s and Disney. Smaller companies and lesser-known brands may also benefit from marketing partnerships, especially when one firm has a well-developed product or service but is limited in its market reach.
Supply chain partnerships: Sticking with McDonalds, the Coca-Cola company is an invaluable supply chain partner, ensuring that the restaurant chain remains well-stocked with soft drinks, which McDonald’s then sells at a steep markup. Similarly, a wedding event planning business may routinely partner with a particular DJ or photo booth provider to deliver a fun and festive wedding experience. Supply chain partnerships can streamline service, improve quality and reduce costs.
Integration partnerships: In this partnership, two or more companies pool resources to create a distinct product or service. Think PCs: an integrated product born of the partnership between Intel, Microsoft and a computer manufacturer, such as Hewlett-Packard. Integration allows companies to bring more value to the marketplace in one fell swoop.
Financial partnerships: Banks, venture capital, insurance and professional services firms are often essential to provide businesses with expertise that they cannot maintain internally.
Technology partnerships: Companies that deal in big data, such as insurance companies or investment banking firms, need technological expertise at the ready. Microsoft’s Azure and Amazon’s AWS platforms are industry leaders in providing enterprise-size businesses with powerful cloud computing support. Meanwhile, a smaller business might form a partner with a web designer to develop a series of engaging landing pages to attract new business.
Related: Don’t Go It Alone: How to Use Partnerships as a Growth Strategy
Finding complementary strategic partners
As a good first step to locating ideal partners for your business, consider those in your network and community who provide services or products that complement your business in some way.
If you’re struggling to come up with potential partners, try looking inward instead of outward. How do you and your colleagues use your time? For example, do you spend ten percent of your work hours in a month managing your accounts receivable, accounts payable, reconciling your bank statements, monitoring your budget or figuring out your tax liability? If so, then you’d likely benefit from a financial partnership with an accountant and/or bookkeeper. That time you free up can be used to support your business’s core operations or to explore new growth opportunities.
I’d recommend setting aside time at the beginning of each year to explore new partnership possibilities. Do this by browsing through your LinkedIn network or other online forums. You can look for upcoming networking events and opportunities to become active in industry associations and committees. Reach out to your former colleagues as well as your customers.
How to evaluate affiliate programs (pre-fabricated partnerships)
Keep in mind that every B2B firm out there, by definition, offers some form of strategic partnership. Several of these firms will offer “partner programs” with their terms and incentives predefined. There are affiliate marketing partner programs, such as the long-running Amazon Associate program for retailers or Airbnb for property managers and owners. You’ll also find re-sale partnerships, whereby the partnering firm provides you with the product (or access to the service) and you provide the marketing. There are literally thousands of these pre-fabricated partnering services to choose from. Here are some tips when assessing whether becoming an affiliate is a good idea for your business:
- Look for a highly transparent description of how the partnership will operate. How much work will you have to do, what costs will you incur, what are the risks and what do you stand to gain?
- Determine the extent to which you’ll have the ability to interface with the partner programs’ leadership. If you can talk to the head honcho, then you may be able to advocate for modifications to the partnership that will advantage you. Moreover, if you encounter a problem you’ll be more likely to get it resolved expediently.
- Find out if the partner program provides ongoing education resources for you and your staff. Free training for your team in areas that benefit your business is always a good thing.
- Investigate any bonus structures, product discounts and other perks that you’ll receive as an affiliate. Additionally, find out if the program pays its affiliates promptly or if you’re likely to get stuck waiting for an unduly long time.
- Look for bad reviews, exorbitant fees to participate, minimum sales requirements and other red flags that could diminish the value of the partnership or even turn it into a liability.
Related: Most Business Partnerships Fail — 5 Hacks to Make Sure Yours Stays Intact
When assessing the optimal partners for your firm, develop your sense of synergy. There comes a point in the entrepreneur’s decision-making process when all due diligence has been done, and the final decision must be made on instinct. Choose the best partners to support your unfolding dream as it pours its way into reality.
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