A Guide to Scaling Business Partnerships

Business partnerships, also referred to as strategic partnerships, are legal collaborations between two or more companies, organizations, service providers, or corporations. Depending on the agreement, it involves sharing capital resources, labor, experience, and/or skills.

A study found that 44% of businesses want to forge strategic partnerships or alliances to drive further innovation and rapid growth.

Most of the major companies in almost every industry have built impactful business partnerships that bring value propositions to each. Apple and Mastercard, Taco Bell and Doritos, and Amazon and American Express are just some of the most successful partnerships.

However, strategic partnerships aren’t just for established companies; they are also for small businesses and startups that want to connect with their target audience.

There are various types of business partners, but the right one can help one another unlock new opportunities like tapping into a wealthy ecosystem, reaching new markets, and getting introduced to a different customer base.

By partnering with a reliable organization or company, your business receives additional exposure and gains a unique edge that can push it forward. These are the common benefits of forging meaningful business partnerships:

• Access to new or more markets
• Better resources such as tools, infrastructure, and technologies
• Improved flexibility and productivity
• Shared skills and expertise
• Cost savings and additional capital
• New perspectives

If you plan to scale your business partnerships soon, keep reading this piece to learn about the key steps.

5 Ways to Scale Business Partnerships

1. Identify Ideal Partnerships
2. Define Expectations
3. Be Transparent
4. Communicate Strengths
5. Evaluate Performance

1. Identify Ideal Partnerships

Partnering with another business is a big decision for both parties. Since every company has its strengths, gaps, and goals, it’s imperative to find a partner company that can fill in those gaps and complement those strengths.

The key to a successful business partnership is having the perfect partner for your goals. Identifying the ideal business partner isn’t as simple as looking for companies with similar goals; it requires understanding the different types of partnerships, assessing which type you need, and how it fits into your business model.

Here are the most common types of strategic partnerships:

• Marketing partnerships
• Joint ventures
• Equity alliances
• Channel partnerships
• Financial partnerships
• Supply chain partnerships

Source: Apple

Apple and MasterCard’s strategic partnership is one of the prime examples of matching with the ideal partner.

Back in 2019, the two companies introduced Apple Pay which allowed Apple customers to use global contactless payment options. Apple benefited from Mastercard’s experience in the financial industry while the latter was able to tap into a wider market.

Sit down with your team and take a moment to understand what to look for when planning a strategic business partnership with a different brand. Consider different factors such as the risks that come with that type of partnership, who will be the ideal partner for what your business needs, and how they will help your company in the long run.

2. Define Expectations

Starting a partnership with a brilliant brand is exciting, to say the least, but don’t let that distract you from establishing clear roles, expectations, and boundaries of the partnership. Before you commit to a business partnership, make sure you define its scope. Discuss the expectations for the collaboration with your team and prospective partners.

For this, you need to look at the potential partnership from a different perspective, not just as an entrepreneur, and consider the following:

• What are your firm’s expectations?
• What are their expectations?
• What will the sustainable growth strategy be?
• What is the best possible timeline for the partnership?

Look at some of the most successful business partnerships and observe their roles in each other’s growth. They not only share a goal or vision but they are also aligned when it comes to expectations.

During this phase, it’s crucial to set the milestones and key performance indicators (KPIs) that you plan to measure from the partnership. Additionally, you should also clarify what steps to take when those expected metrics aren’t achieved. This will help you both pivot and track whether it’s benefited both parties.

3. Be Transparent

Communication is the key to all kinds of partner relationships, including business partnerships. Building and maintaining trust requires clear communication between both parties, regardless of the partnership's current phase.

You need to transparently and regularly be in contact with your potential partner regarding all matters — coordinating day-to-day workflows, discussing challenges, giving invaluable feedback, and reporting progress.

Tools like project management platforms, communication platforms, and dashboards are great for maintaining transparency.

Remember that communication is two-way, aside from being the messenger, you also need to listen to your business partner actively. If they have concerns or suggestions, be sure to consider them to avoid conflicts and miscommunication. Being open allows both parties to grow and establish a positive partnership culture that can lead to long-term success.

4. Communicate Strengths

In the partnership, more often than not, there are imbalances between both parties in terms of resources and strengths. One partner can have more experience than the other, while in some cases, they can have different limitations when it comes to funds.

The best way to overcome this massive hurdle is to communicate your strengths and help each other leverage them. The gap will only grow if each partner doesn’t know how to fill in the void.

Source: USA Today

Taco Bell and Frito-Lay have a long-standing and iconic partnership that caters to each other’s strengths. Frito-Lay knows how to make Doritos, and Taco Bells are known for their — well, tacos.

The initial challenge they faced was how they efficiently produce taco shells out of Doritos chips. They combined their expertise, having their engineers and product designers come together to create a machine that would produce the taco shell they were looking for.

Since its launch in the early 2010s, the two company’s Taco Bell Doritos Tacos Locos rose to become a staple in the fast-food industry. Their journey is an example of knowing how to maximize each other’s strengths and reach.

When scaling business partnerships, you share expertise, skills, and knowledge, not just resources. This way, both businesses get opportunities to grow and learn from each other.

5. Evaluate Performance

For a strategic business partnership to work, consistent evaluations are essential.

At the end of every milestone or specified period, you must carefully examine the output and compare it to your expected objectives. Are you achieving your goals? Did the partnership add value to your business? What hurdles did the partnership face during the period?

Meticulous evaluation paves the way to identifying unseen opportunities, learning from challenges, improving gaps, and innovating further. It also allows you to see progress and celebrate milestones.

As a business owner, evaluation can also guide you in your decision-making process. By reviewing the progress, you can see how the partnership evolves and if it still benefits your business. 

Things to Consider for Business Partnerships

Business partnerships can welcome different possibilities but don’t let the excitement carry you away. Don’t rush your decisions because, at the end of the day, jumping hastily on a partnership without giving careful thought can give you more costs than benefits.

Here’s a list of everything you need to ponder and study for your business partnership:

• Detailed and fair partnership agreements
• Synergy in company culture, value, and mission
• Business strengths and weaknesses 
• Resources and skills that will be shared
• The onboarding process for the partner program
• Knowledge and experience that your business will gain
• Potential tax implications of the structure
• Proper exit plan

The potential incentives can be enticing but don’t focus on just those; that’s the biggest mistake any business owner can make. 

Strategically Scale With A Partner

Today, consumers have plenty of options because of how saturated certain markets can be. Forming a successful business partnership can be great to give both companies the edge they need to attract new customers and achieve their goals.

While there is no formula to success, you and your strategic partner can create a blueprint that’s tailored to your journey. This piece merely reminds you of the essential foundations needed to scale your business partnership.

Need a consultant that can give you an unbiased perspective on your potential partnership? Connect with the top business consulting firms on Clutch.