If there is one thing that I know I have been good at over the last two years, it would definitely be my ability to lock down and close a well aligned and successful strategic partnership. I have done it with companies, media organisations and have just finished closing some pretty epic partners for 2014 that you will learn more about in the media in January.
The secret to strategic partnerships is simple. However, I would say that 80 percent of startups I talk to have the wrong mindset when it comes to setting up a relationship; and that is why most of them are failures. Here are 5 reasons those strategic partnerships of yours, are not strategic partnerships.
1. You are making it about YOU and not THEM
On the street these people are called USERS. It’s all about how much you can take without what you can give being front and centre in your train of thought. Every time you are approaching a company to talk about a strategic partnership, the first focus should be on what you can give to them. It is always better to approach everything in business from a position of service.
For instance, we’ve been approached multiple times to strategically partner with companies that are targeting startups and entrepreneurs – and in every situation, they are able to tell me what THEY will get out of it for THEIR business, but can never answer when I ask them what is in it for me. I am usually astounded that the reaction I get is one of puzzlement, and people telling me I should be excited that people want to use up my real estate on the site for free to target a community I have built – just because. THAT is not a strategic partnership, that is using someone.
2. You don’t treat it like a formal business relationship
For a strategic partnership to be successful, you need at the very least a memorandum of understanding. It is important to set expectations, deadlines, roles and responsibilities. When you don’t, things will eventually begin to taper off with the partnership as nobody has made any formal commitment to the other. Having a one page document you can both agree upon and sign off on is a necessary part of a strong partnership; it acts as protection and motivation for both parties to make it work.
3. You have no clear vision for your business
There is a reason you are approaching another company to discuss entering a strategic partnership; it’s because they already have a solid database of paying customers. A lot of startups have conversations about partnering with a company WAY too early in the piece and ruin the chances of ever getting back in the room to have any further conversations.
Get clarity around what it is you actually DO, what it is you are actually about before you approach people to talk about growth strategies. Sometimes this can take years to actually gain clarity, to be honest with you, I only gained a truly solid clarification on the way forward for our company about 7 months ago. If you don’t understand what you are wanting out of a partnership, they certainly won’t know.
4. You keep asking everyone to sign an NDA
I don’t think it is just me, because I have been seeing a lot of conversations online of late about startups wanting every single person they run into to sign an NDA before they are comfortable talking about their business. A quick bit of wisdom – most of the businesses you are approaching don’t care about your idea to begin with, because they have already been working on their own and quite successfully (after all that is why you are there); your idea is not that special and it is worthless until you execute it and build a business.
Once you have a functioning relationship with another business, you may wish to execute a confidentiality clause that protects both businesses from discussing the other’s IP and other related items with outsiders, but that is a different thing. The term NDA is a dirty word when starting out any conversation in the startup scene, you lose all engagement.
5. You are not following the ‘TWO for them ONE for me’ rule.
This is a rule that I live by when putting together any kind of partnership and I am the instigator. You always make sure that there are two wins in it for them and one win in it for you, especially when you are the startup and have no leverage. I am not saying allow yourself to be raped and pillaged by a massive corporate, I am saying that in order to get that ONE thing you really want out of them, deliver them twice the value from your end. After which if things are traveling well, revisit the agreement in 12 months time.
Featured image: www.caylx.com.au