A good partnership deal can take your business to the next level, and no business is too new or too small to start looking towards the future and considering potential partnerships.
To find out exactly how other business owners are navigating partnership deals for their young businesses, we asked a panel of successful entrepreneurs to share their best tips and tricks. Here’s what they had to say:
1. Be Transparent
The most successful partnerships between two separate businesses happen when both parties are fully transparent and up-front with each other. That transparency will lead to mutual trust, which ultimately translates into an increased confidence in working together and growing each other’s businesses.
– Alex Frias, Track Marketing Group
2. Make It Clear That You’re There to Help
It’s that simple, but you just have to make it clear to your potential partner that you are there to help and can execute.
– Trace Cohen, Launch.it
3. Enact a Vested Value Clause
It’s often difficult to completely trust a third party in a partnership deal. The best way to protect each party is to enact a clause that suggests a “vested value” — of which the benefit gained by the more active party strengthens if the actions aren’t reciprocated on the other end. Obviously, there are many ways to conjure an arrangement like this. I suggest using an attorney to do so.
– Logan Lenz, Endagon
4. Communicate Respectfully
I often have to structure partnership deals between two businesses, and my best tip for making sure both parties are happy is to emphasize the importance of respectful communication. It can be stressful for employees and their leaders to adapt to a new partnership, but as long as everyone feels that they have an open line to speak about their concerns, operations typically go quite smoothly.
– Jay Wu, A Forever Recovery
5. Create a Mutually Beneficial Partnership
Creating a successful partnership requires you to focus on long-term value. One-sided partnerships where one or the other company “wins” in the short term don’t typically work. Therefore, set the stage from the start, and be fully transparent about your desire to create a mutually beneficial partnership where both sides feel equal. You’ll win in the long term!
– Kristopher Jones, ReferLocal.com
6. Make Sure You Have a Way Out
Not all partnerships are successful, and you should have a clause in your agreement that will allow you to dissolve the partnership if necessary. Explicitly write down what happens to all assets to avoid any potential problems.
– Andrew Saladino, Just Bath Vanities
7. Do a Completely Transparent Pilot Program
The best partnerships are long term. Ensure that both sides are incentivized correctly by doing a completely transparent pilot program where you share all metrics. Be honest about what went well and what could be improved. That honesty will lay the foundation for a great partnership.
– Chuck Cohn, Varsity Tutors
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8. Work Toward a Good Outcome for all Parties
Remember, life is long, and the best negotiation and agreement is one in which everyone feels it was a great deal. You will then have more happy customers, referrals, positive reviews and good juju. I didn’t always do this; when I was younger, I would get greedy and try to push the negotiation in my favor. Rarely, if ever, did this result in the best outcome.
– Matt Ehrlichman, Porch
9. Do Business With Trustworthy People
First, you must do business with people you trust and like. Second, there has to be a clear benefit financially, strategically or with perception. I have done some deals because there was a clear financial benefit, and I have done deals simply to have the other company’s brand enhance mine! So you need to ask yourself “Does this really benefit us, or are we really just benefiting the other party?”
– Adam DeGraide, Astonish
10. Answer the Hard Questions
Our lawyer, Sheheryar Sardar, recently sent a marketing partner a four-page agreement, and the partner said, “I’ve never seen anything like this. It’s just a simple sponsorship.” That may be true, but a well-explained document answers hard questions and defines parameters so no one is confused about her role or the outcomes. It brings to light potential contingencies and gets everyone on the same page.
– Benish Shah, Vicaire NY
11. Have a Strong and Clear Deadlock Provision
There must be a strong and clear provision in the contract on what will happen if there is deadlock on a key matter – this is especially true in a partnership of equals. Whether the correct mechanism is “Russian Roulette”, the “Texas Shoot-Out” or bringing in a mediator, it is essential that both sides know what happens when they cannot agree on something fundamental.
– Peter Minton, Minton Law Group, P.C.
12. Focus on the spirit
If the spirit of the deal is clearly understood by both parties and acknowledged then the details fall into place easily. It also makes things much easier if you have to unwind the deal at so point.
– David Cohen, Round Table Companies
13. Get Clear Information Flow
Partnerships tend to fall apart because of communication problems, so coming up with a detailed plan from day one for how information will be shared, who will be responsible for communicating specific elements, and which channels will be used really helps alleviate stress and potential road blocks.
– Martina Welke, Zealyst