Question: How do you evaluate businesses that approach you to become a strategic partner?
Don't Push Square Pegs Into Round Holes
"Create strategic partnerships with companies that operate in excellence and effectiveness. Excellence can be assessed in the small things -- communication, current platforms and a focused offering. It has to be a complimentary fit to my overall business vision. Don't push square pegs into round holes -- not every proposal that crosses your desk is a good fit."
Use the Strategic Partner Test
"It is impossible to have a strategic partnership with everyone. To determine whether a partner is right for you, check them against the following criteria: 1) Do you like them? 2) Do you have compatible goals? 3) Will they make you money? If these three factors do not line up, the partnership will not work. You must have the right chemistry, drive for the same things and be profitable. Period."
Figure Out Why They Are Approaching You
"Are they approaching you for their own personal reasons or because they really feel it's a win/win for both of you? Often, when you're approached, the deal in reality isn't as good as what they try to sell you on. Understand their main motivations, and then decide if that's in line with your goals, and more importantly if they are the right fit for those goals."
"In order to evaluate a potential strategic partner, take them through the courtship process (metaphorically). Choosing strategic partners is very much like dating -- you need to find the right match in order to be successful. Take time to learn their strengths/weaknesses, and don't jump into anything too fast! See if you jive well together and trust your instinct about your decision to partner."
Partnership Is Passion
"You wouldn't marry someone you didn't love, why would you partner with a business you aren't passionate about? Spend time, research the business, understand how it works, what are the future goals for it and what can you do to help make an impact. If you love the project, you should partner up."
What Is Your Roadmap?
"The most important thing to consider when approached by a strategic partner is whether or not the deal will derail you from executing your vision. If the partnership helps you execute on your vision quicker, easier and at a higher level, then it's worth considering. If not, stay away. "
Examine the Outcome
"Partnerships should result in an outcome that you might not otherwise be able to create without the partner. Be clear about what outcomes could be created, and explore whether that outcome is essential to moving your business forward."
Make Sure Value Propositions Are Clear
"There needs to be a clear understanding of the value each company can provide each other from the very beginning. It's easy to be excited about connecting with an interesting company; however if it's difficult to align with that company it's not worth your time and resources. Focus on partnerships that can add mutual value and grow over time. "
Ethics Is Everything
"A potential partner must share our values: customer service, integrity, honesty. When I call the partner's offices, do I get treated the way the partner would at my company? Does the partner deal openly with problems or focus on blame? How is the partner perceived by his customers? A partner company becomes an ambassador for my company, so the message conveyed to customers must be the same."
Risk and Reward
"Be meticulous in your evaluation of the risk/reward of any strategic partnership. Be sure to lay out everything you can think of, both pro and con, based on the partners' management, company and product, past, present and future. Being well prepared lowers the odds of letdowns later on."
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the country's most promising young entrepreneurs. The YEC promotes entrepreneurship as a solution to youth unemployment and underemployment and provides its members with access to tools, mentorship, and resources that support each stage of a business's development and growth.