Not Too Fast: Delay the Engagement

Quick Summary: It is easy to look longingly at big potential partners, but are you ready for them?

Abstract:

There is no question that new or small companies can benefit tremendously from forming partnerships will large, well-established companies that can fill voids that they have.  Unfortunately, those larger more mature companies will have processes and procedures that they have implemented to support their size and success.  Smaller companies cannot expect these larger companies to fully compromise to accommodate them.  Smaller companies must carefully think through what they will need to do to be ready for a new and demanding relationship.

The title of this article, as it pertains to business partners, may seem to be in conflict with the business partner articles in Chapter 4 as well as most of the articles in this chapter.  The title is another way of following the cautionary old saying of “Be careful what you wish for”.  The implication is that there could be unintended consequences associated with achieving your goal.  In this particular case, you may form a business partner relationship that can quickly turn sour.  This situation commonly occurs when a startup or smaller company forms a relationship with a much larger, more mature company.  In this series of articles, those companies are referred to as Goliaths.  Although the intent of both parties may be correct, the expectations may be inconsistent.

An example of this situation is a new or smaller company that has a new product and is “longing for” national distribution.  Only to find out after the fact that they are totally incapable of meeting the support and volume demands placed on them by their new, huge distribution channel.  The article in this collection, “Revenue: The Wonder Drug” uses the somewhat crude analogy of this situation with the comment that “You choke to death must faster than you starve to death”.  The key message is to be ready and to carefully think through what will be required of your organization by a potential business partner.

In many cases, a larger business partner’s basic requirements may be well beyond the scope of your company.  Such items as automated order entry and processing systems, automated customer service systems with 7 day by 24 hour support availability, return and repair systems, MRP systems, and formalized sales forecasting system may be fundamental requirements that a large partner needs to use to manage their businesses.  You, on the other hand, may be accommodating your business volumes using Microsoft Excel™ worksheets and Word™ documents.  At your current stage, you simply may not have the resources to implement the required systems associated with high business volumes.  As one other example, many large companies require all of their vendors and partners to have implemented a formal quality system that may included outside, independent certifications, and even past applications to the Malcolm Baldrige National Quality Award.  It is hard to argue with a mature company’s focus on this issue, but it is equally hard to argue that a new or small company can focus their resources on the required formal processes.  This example in no way is meant to diminish the importance of providing quality products or services by organizations of any size.  It is meant only to highlight the difference in expectations that can arise during partnering implementation.

The impact of surprised missed expectations is that the relationship can be terminated with long-lasting repercussions.  Later, when you have implemented the required systems, the Goliath partner will remember the past and may not even entertain a future partnership.  In deciding to pursue a partnership, be sure to clearly understand what you have to offer, what you expect in return and equally important what your potential partner will require and what they can expect in return. Upfront, paint a realistic picture of who you are, where you are, and what you can offer.  If their initial assessment is not positive, postpone the engagement to avoid a quick and awkward divorce early in the relationship.

 

Article Number : 5.050203   

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