This is the 5th article of the Making Of An Online Business series and it will deal with your partnerships. After talking about your projects, teams and money, it’s time do dig a little on your alliances, associations, or, in other words, partnerships.
If you came here directly I encourage you to read the rest of the articles in this series by clicking on the links below:
- Start Your Own Business
- The Making Of An Online Business – The Series
- The Making Of An Online Business – The Projects
- The Making Of An Online Business – The Team
- The Making Of An Online Business – The Money
What’s A Partnership?
A partnership is at the organizational level what your team is at your human resources level. As the words imply, it is a resource, a complementary resource that will provide more value to your business.
Generally speaking, a partnership is an alliance in which each part is providing specific values to the other parts. It is based on trust, acceptance and common goals or resources. A partnership is a temporary association of two or more organizations in order to attain a specific goal faster or with fewer resources consumption.
I will say this again, until it will be really clear: online is the most dynamic business context ever. Things are happening lightening fast. Like really lightening fast. Keeping the old individualistic approach of “I’m the best in my field” won’t work anymore. Because you can’t be the best in your field anymore. You can only offer a slightly more interesting perspective than your competition, and even that only for a limited time.
If you want to increase your market penetration, you have to let go a little on your ego and trust on partnerships. I’m not saying to rely exclusively on partnerships, but treat them at least as necessary tools for expansion.
The real trick here is to chose your partners extremely carefully. They must operate in the same business context as you, but they don’t have to make the same things as you. They will be, of course, your competition, in this case. I can’t believe how many people ignore this simple and apparently dumb rule when they are going out for partners. And they do that by either trying to partner with the competition (not a bad thing for a desperate business, by the way) either by going for partnerships way too far from their audience.
Choosing the right partners for your business can be sometimes the only difference between success and failure. Those partners must provide value and market penetration while maintaing your brand integrity at the same time. For instance, if you have a niche site about cars, you can start partnerships with ONG’s in the field, with car exhibitions or with car parts dealers. You will maintain your business specific, while increasing your exposure and market penetration with those complementary partnerships.
When Can You Start A Partnership?
That’s another key factor in creating successful partnerships. My first criteria would be: whenever you feel you can offer significant value to your potential partner. Starting a partnership after the first three months of your business would be highly unusual in this case, because is really difficult to establish a significant presence in only three months.
Of course, nobody will stop you to go for your partnerships really early down the road, if you think this is the right thing to do. But keep in mind that you’ll expose your business to several dangers, like brand dilution, for instance, or even business absorption, if you happen to establish an imbalanced partnership with a player significantly bigger than you.
The second criteria would be: whenever YOU are ready for that. You can see the opportunity, you can understand the benefits, but you must be sure you can cope with your responsibilities in that partnership. Jumping on your business relationships too fast can damage not only your image in the market, but in the long term it can seriously damage your bank account either. So please take your time to asses if you’re really up to what you want to do, and save some serious troubles later.
How To Initiate And Maintain Partnerships
I feel I can write an entire book on this topic only, this is how big I feel it is. There are hundreds of approaches on this matter and each of these approaches is in turn modified by the personal experience, cultural habits and specific contexts of each and every entrepreneur. But despite its apparent complexity, the art of initiation and maintenance of partnerships has only three main points to be respected, and those are: common goals, limited duration and specific contexts.
Partnerships have a goal
It’s fundamental to understand and apply this principle. Each of your partnership is made for something very clear and specific, and you must be aware of that. You also have to state this goal as often as you can, in the official papers of the association, in the real life conversations with your partners, in your notes after the meetings. You must know every second why are you doing that partnership.
Because it’s very easy to be distracted along the way. A partnership is a relaxed walk on a very tight edge, and you can suddenly walk on thin air if you’re not paying attention. You put resources, time and image capital in each of your partnerships and if your initial goal has been changed, you must know that instantly. If you agree, there’s no problem going on (we’ll se below about the context of a partnership), but if you don’t agree anymore with the initial goal you must take action immediately.
Partnerships have a specific duration
Nothing is going on forever, not even the most beneficial partnership in the world. Please understand that before signing your next “inoffensive” association for the next ten years. Even if things are going on great now, there is no way to know if tomorrow will work the same. So, be prepared to thoroughly assess your associations in terms of duration.
Being time aware in your partnership has a great impact on the resources you allocate to that partnership and it greatly helps in the analysis process. Choosing the exact duration for a partnership is extremely difficult because there is so much variety in this business field. But I’ll risk to advice that any partnership you start has at least one financial year as duration.
There are of course many metrics involved in a partnership, not all of them money related, so youÂ won’t be able to see the financial benefits of a partnership in only one year. But you will clearly see the resource consumption for one year and that’s interesting enough.
Partnerships have a specific context
Every partnership is born under certain circumstances. Most of the time, those circumstances are specific market conditions which forces you to new alliances. It’s vital to assess those market conditions in order to understand if your partnership is still necessary. Maybe those market conditions are changed for good and that partnership is redundant now. Or maybe the conditions are worse and you need to strengthen the initial goal.
Whatever case might be, keep in mind that a partnership can only last if the initial context is still on. The slightest change of that context can dramatically affect the initial goal and lifetime of the association.
So, whenever you start thinking at a partnership, take the time to assess the goal, the duration and the context for that partnership and be ready to re-evaluate each of those parameters, if need will be.
That’s it for the partnership part of this series. I’m really curious about your insights on this topic and would love to hear that in the comments.