As described in Chapter 2.04 of this collection, business partners are the second most important category of company investors. They are second only to the company’s employees. This high ranking is justified by the fact that the company’s business partners provide meaningful components, help, and assistance to the company in providing their products or services to end customers. In today’s highly specialized and complex business environment, companies simply cannot practically develop all of the required capabilities to be successful. This even includes the lone developer of a smartphone app. Although they may have been able to develop the application on their own, they are totally reliant on its availability through one of the app stores and companies that provide the application development environment. Companies that are larger than the single, individual developer, are equally or more so dependent on others.
The company’s business partners are not only critical to a company’s success; they are also heavily invested in the company’s success. In many cases, by choosing to work with a particular company, they are implicitly choosing not to work with other companies. To some extent, they will have dedicated resources to the company that they could have allocated to another company. With their actions, they are also providing external validation for the company through their investment commitment. Most of the articles in this chapter could have been equally placed in Chapter 2.04 that describes the company’s four investor categories. However, because of the significant impact that business partners can have on the company’s revenue, they have been placed in Volume 5, The Top Line of this collection.
To help provide both background and context, it is suggested that the five articles listed below, and included in Chapter 2.04, be reviewed.
Chapter 2.04: Business Partner Investor Articles
- Business Partner Investor Overview
- Business Partner Investor Introduction
- Partnering Secret Sauce Ingredients
- Partnerships: The Beginning, Not the End
- Why Are You Interested in Each Other
The Sections and Articles included in this chapter are listed and summarized below.
Chapter Sections and Summaries
- Business Partner Arrangements
There are a number of different partnering arrangements that can be made. Before discussions can occur, the potential partner must envision a relationship which will benefit them.
- Distribution Partners
Although establishing partner relationships for different aspects of the business are important, distribution partners are, by far, the most important. Working with companies that already have a presence in the company’s target market and relationships with customers can dramatically speed up the company’s revenue ramp.
Chapter Articles and Summaries
Introduction to Business Partners
Finding and working with business partners is a mandatory activity for every business.
David or Goliath Partners
Partnering with either small companies or large companies has different advantages.
Partnerships: Start with a Story
Provide a description of how customers will benefit from the partnership first.
Not too Fast: Delay the Engagement
It is easy to look longingly at big, potential partners, but are you ready for them?
Partnership Risks and Pitfalls
Partners require mutual benefits but are always subject to some level of friction.
Incompatible DNA
Different core capabilities may make a partnership look attractive but may backfire.
Finding Prospects and Reaching Customers
Leveraging existing distribution channels can significantly jump start a business.
Exclusivity: Always Requested, Carefully Given
There can be positive benefits in agreeing to exclusivity and some significant downsides as well.
Near Term Opportunities Drive Partner Deals
Nothing speeds up partnering discussions more than a short-term revenue opportunity.
Avoiding Partners from Becoming Competitors
Constantly increasing your value to your partners will help to keep the relationship intact.
Channel Partner Arrangements
There are many different channel partner arrangements; all required detailed definitions.
Setting Channel Partner Expectations
Minor bad news or even good news can have an adverse reaction to your partner if it is a surprise.
