Finding, developing and managing partnerships with other businesses is a complex game. On the surface, they can appear to be a cheap and fast way to expand business. However there are many challenges:

• What sort of relationship best meets the needs of everyone?
• Will it cannibalise my other business, or cause conflict with other partnerships?
• Can I trust them? Can I protect myself?
• How much is it worth to my business?
• How much value do they add?

Sometimes a casual, one-time thing for a specific customer or job works well. Other times a formal arrangement requiring great commitment from both sides is needed. While there are no fixed rules about what works for any given circumstance, there are common factors that help point to the type of relationship that will work.

There are two key principals that are essential to consider: “purpose” and “value”. If each party has a clear purpose and knows their true value, then any business relationship has a strong chance of success. The purpose will help determine the nature of the relationship -co-marketing, franchising, joint ventures, distribution, reselling, relicensing, the list goes on. The value determines the role in the value chain – retailer, wholesaler, solution provider, value added reseller, agent, supplier, licensor, and so on.

Creating a formalised arrangement such as a franchise, distribution agreement, supplier terms of trade, etc, can have a profound, scalable impact. Create It once, get it right, then re-use. The cost and risk of incremental business is dramatically reduced. At the same time your appeal as a business partner is increased, because the wrinkles have been ironned out and your value has been proven.

Building partnerships enables a business to entrench itself in their eco-system. It creates barriers to competitors, and enables a market reach that would be uneconomic to achieve any other way.