Strategic Relationships: The Key to Future Prosperity
Building strong alliances and strategic partnership relationships with both industry and local businesses should be a top priority for any entrepreneur or business owner who wants to rapidly expand their customer base and market reach, broaden their product and service portfolio, and improve sales and profits.
Why are partnerships the key to your future prosperity and growth?
There are a number of compelling business and economic reasons why you should be selling with and through partners, beyond the obvious that direct 1-to-1 selling is the most expensive way to grow.
Benefits of strategic relationships
- Receive generous commissions on products and services sales
- Gain access to leading products, services and business building tools
- Receive training and support from branded product and service companies
- Obtain free sales and marketing tools to help you identify new revenue sources
- Strengthen your brand through business relationships with high profile partners
- Expand your market reach without major investments in advertising and marketing
- Extend your value proposition by offering a broader array of products and services
For solopreneurs and business owners, identifying potential partners and cultivating those key strategic relationships should be an integral part of your ongoing networking and business development activities. Formalize these discussions through meetings with “like-minded” business owners with similar goals, who are open to partnership arrangements.
How do I source potential partners and determine the optimal partnership arrangements for my business situation?
A great way to identify potential partners that are a good match for your business situation is to evaluate your current supply chain relationships. Who are you doing business with today, and who is doing business with you? See if synergy opportunities exist to broaden those customer- supplier relationships, and then start a dialogue.
Partnerships represent indirect sales channels for your business and offer access to potentially lucrative new geographic markets, emerging products and services, and future profits.
Common partnership arrangements
- Affiliate. Most common form of partnership within the online business community (i.e. click through sales). The majority of affiliate partnerships require some type of a formal agreement, and pay generous commissions up to 40%+.
- Referral. Many referral partnerships are informal or local “hand shake” agreements. One-time cash bonuses or commissions are paid on new sales at a lower rate that an affiliate partnership, and sales tend to be sporadic or event driven.
- Reseller. A reseller or VAR relationship is typical within the technology, software and services areas. Reseller agreements can be multi-tiered and offer commission rates up to 45%+ depending on the revenue commitment level.
- Joint Venture. JVs are generally complex “one-off” business relationships that enable two or more parties to share markets, intellectual property, assets, domain knowledge and profits.
- Affinity. Affinity partnerships tend to be informal, local business relationships tied to a specific program or event. Potential affinity partners can include the local Chamber of Commerce, business or trade associations, networking groups, etc.
The goal of partnership agreements should be to forge “win-win” relationships that benefit both parties. For any solopreneur or small business owner, it’s important to strike a balance between your direct and indirect sales activities. This will enable you to profitably manage growth, while delivering greater value to customers. You’ll need to determine the “best fit” for your business.
How have you created strategic relationships? What has worked for you? What hasn’t? Comment below.