As an entrepreneur you may be hesitant to jump into a business partnership. The “Do It Yourself” approach has fueled a sense of independence and control that has defined how you run your business. But in an ecosystem where the line between competitor and partner is blurred and business partnerships are integral to the success of many businesses; you may consider exploring this avenue.
The saying “two heads are better than one” implies that working with another person or company can double your ROI. But to do so, you have to identify certain requirements in your potential partner and set parameters to ensure its success.
Here are three questions you need to ask before forming a business partnership:
Is This Mutually Beneficial?
What may seem like an obvious question, can actually be convoluted. To answer this question you have to understand your potential partner as much as you understand your business. Knowing the “why” means examining what interests a potential business in partnering with you. This answer sheds light on what your partner ultimately wants to gain and how that aligns with your goals.
To forge a strategic relationship you have to foster a symbiotic and collaborative partnership. For a trusting and ultimately successful partnership each have to feel like they are benefitting. Thus, be sure to properly incentivise and have both parties be accountable for their own and each other's success.
Does This Benefit Your Customer?
Business goals and mission statements are often centred around your customers; your business partnership should be too. The investment in your customer's experience is paramount.
For example, Pottery Barn found that their customers’ were repeatedly asking what colours to paint their walls to best complement their furniture. In response, Pottery Barn partnered with Benjamin Moore to create an exclusive paint line and a website component that helped customers select paint colours based on their furniture choices. This strategic partnership expands a customer’s journey from a purchase into an experience.
Is There A Shared Vision And Cultural Fit?
Studies indicate that between 50-70% of strategic partnerships fail due to underperformance by one or both parties. This is often the consequence of having misaligned goals or focusing too heavily on the numerical gain. The process of choosing a business partner should be as thoughtful and rigorous as hiring an employee. Making sure it’s a cultural fit will help establish continuity and ensure that the values and personalities behind both businesses foster collaboration, not division.
Similar to ensuring symbiosis, both parties should share a similar vision about the goals of the partnership. Too many businesses get into partnerships without the understanding of the key economics, performance indicators, or business drivers of their partner. A shared vision and contextual understanding of each other will increase efficiency, cut down costs, and help you reach your goals quicker.
At Revel, we’ve asked these very questions and then some before embarking on our business partnerships. In the understanding that we’re better together, Revel partners with FreedomPay to supply unprecedented protection for transactions, Punchh to enhance customer experience, Expensify for ease of use, Apple to ensure your POS software is supported by the highest functioning operating system, and many other industry leaders to expand our Point of Sale capabilities.