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How to Effectively Manage Strategic Partnerships

There can be strength in numbers, and successful business partnerships and strategic alliances are a testament to this. Studies show that corporate alliances increase by 25% every year, but what makes such a venture attractive in the first place?

The same study reveals that alliances account for nearly a third of a business’ revenue and value. As this article on Mckinsey has put it, partnerships can be a huge factor in helping companies a) gain access to untapped markets and channels, b) allow two entities to share intellectual property or infrastructure, or c) even reduce risk for both parties.

However, as beneficial a strategic partnership can be, things can also go sour. One poll released by Mckinsey shows that there are a multitude of reasons why alliances do not work out.  According to the poll, the failure rate for alliances hovers between 60% and 70%.

Some of the reasons behind these failed partnerships can range from the partners’ disagreements on central objectives, to poor communication and governance practices, and even to one or both sides’ inability to identify and quickly make the changes needed for the partnership to succeed.

A business partnership can be fragile, and it needs conscious cultivating. To make strategic alliances and agreements work, here are three best practices to establish before pursuing a partnership:

Set a solid foundation

As with every transaction, a contract is a must in every business partnership. Make sure that the terms and compensation detailed in the agreement are points you and your prospective partner are comfortable with. It should also detail how you are going to work together, and how resources of each company will be utilized. Establish how this will cause a ripple effect internally and how it will change management protocols.

Beyond the needed paperwork, start building a foundation by recognizing the strengths of each side.  How will your company  be of value to both the partner company and the consumers you plan on targeting? Moreover, take this time to check and see if there is a market for the product that will be born out of the partnership.

One example of a successful strategic business alliance is the partnership between Apple Pay and Mastercard. Apple Pay was able to get the benefit of MasterCard’s reputation and financial credibility, with Mastercard being the second-largest card provider in the world.

On the other hand, MasterCard was able to further tap into Apple’s loyal followers, effectively becoming the first card provider to become an Apple Pay authorized option. Both were able to leverage each other’s strengths to their advantage while supporting the other through their respective weaknesses.

Constant communication and clear expectations

WP Engine’s SVP of Corporate Development and Strategic Alliances, Lisa Box, said it well when explaining the importance of setting expectations in partnerships:

“Setting expectations from the beginning is key. Being direct and outlining what the expected outcomes from the partnership for both parties will look like at the beginning of the project will help determine if the partnership will be successful. The key is defining what success looks like first and then working your way back from there.” – Lisa Box, WP Engine, Inc.

Being clear on what to expect and what you aim to receive from the partnership ensures that all cards are laid out on the table. Firmly establish what you can offer, what you are both working towards, and how you will work together in order to achieve your common goal.  Then properly communicate this to the other party.

In order to reach this point, make sure your business vision first aligns with the partner company so you can work on the same mission together. Keep everyone in the loop so that people will remain accountable throughout the partnership. This can help prevent possible miscommunication down the line.

Connect socially and go beyond business

While it is easy to simply get down to business,  conversations about sales and strategic plans can lead to a monotonous collaboration, leaving much to be desired when trying to establish trust and empathy for the other’s objective. In the same Mckinsey research, one energy-sector executive highlighted the importance of “spending time on the other company’s turf.”

As someone who has negotiated and managed dozens of partnerships, this executive noticed that only about 30 to 40% of partnership meetings are about business. The rest of the time is spent on connecting and building friendships.

Bill Gates and Paul Allen is one example of a successful partnership rooted in a lifelong friendship. Having been friends since they were students in a Seattle-based school, their dynamic was already tried and tested. Microsoft would not have been created if not for the other’s contributions and support.

The benefits of connecting socially and not just as entrepreneurs, also applies to established companies looking to partner up. It is one way to understand the other’s perspective, paving the path to better collaboration.

Strategic partnerships can be an exciting venture, but management of such an alliance can sometimes be a struggle for some. Proactively making it work, through establishing foundations and being on the same page when it comes to respective contributions and the vision for the alliance, are just some of the keys to making it work.

 

 

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9 Ways To Increase Sales And Revenue In Your Business

Refinement of the core company principles that will be foundational to the success of your sales and marketing activities.

In a conversation with a gentleman about his business, we were reviewing how he would actually do business.  We began with questions about his products and services, pricing and other features, to which he was able to provide answers. However, despite having the pieces and parts in place in theory, the plan was lacking the alignment that a business requires to effectively drive sales and revenue which, of course, is critical to the success of any business.

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How to Start a Scalable Lead Generation Business

Ask any entrepreneur and no one will claim that there is an easy business model. Each idea needs grit and hard work for the business to become  profitable. However, many entrepreneurs are drawn to lead generation because this type of business does not require a company to develop a product to make high and consistent income every month.

This article will delve deeper into the lead generation business model, what makes it profitable, and how to start building a scalable lead generation venture. [···]

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  • The Failing State of Small Business

The Failing State of Small Business

The Role of Mergers and Acquisitions Amidst the Pandemic

Small business owners who are running completely out of options (and in many cases, running out of hope) are going out of business in droves, crushed by the weight of the pandemic and without the support of an effective government.

The last thing many business owners are thinking about right now is buying a business. With so much uncertainty in the marketplace, even global brands such as Boeing have stopped their plan to acquire a major stake in Portuguese aerospace conglomerate Enbraer while open deals are on the table for companies such as Google Cloud, Nestle SA, BlackRock and Boohoo according the Harvard Business Review article, “What M&A Looks Like During the Pandemic.”

The pandemic has driven the climate for business deals to an all-time low. However, according to Fortune Magazine, “M&A is showing signs of life in the healthiest and least healthy sectors,” and the markets for business are beginning to come back.  The article goes on to report that the deals are smaller, prices are lower, there are fewer of them, and private equity is playing a much larger role in getting the deals done – all which present an opportunity for them to buy distressed companies at a discount with the expectation of substantial returns at some point.

How does this impact small businesses?

According to Bloomberg’s article, “Small Businesses Are Dying by the Thousands — And No One Is Tracking the Carnage”, there are thousands of small businesses that are going bankrupt or are simply walking away as the economy is decimated by the prolonging pandemic. Thousands more are afraid that their firms won’t survive either and they will end up in the same fate.  The loss in revenue and difficulty generating sales in their traditional format is just too much for these firms to bare.

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An article in Inc. magazine, “How Change Offers New Opportunity for Buying a Business, During and After Covid-19,” shares how the Cares Act SBA subsidized loan program created an opportunity for some business owners to purchase companies that entrepreneurs may be trying to unload. As private equity financiers noted – it may be an opportunity time to purchase or partner with a struggling business at little to no money down and a delayed repayment schedule.  Unfortunately, all funds have been distributed and there doesn’t seem to be a plan in place to revive it.

While struggling companies such as JC Penny, Brook Brothers and Lucky Brand are at least being considered for acquisition as they face or have faced bankruptcy, most small businesses and small business owner are simply not in the position to be able to outlast the  devastation that the pandemic is causing.  The market simply isn’t there for many smaller retailers, restaurants, gyms, beauty salons and other businesses to survive in their traditional format.

Many companies that could potentially have a greater online presence simply don’t have the technical expertise or level of support to make the transition. The potential problem right now is this: should there be a resurgence and a secondary shelter in place or national quarantine, these companies are going to be in desperate positions.

It would be my hope that governments would focus on developing solutions for its growing number of unemployed citizens, whether they had traditional W-2 employment, they were contractors or business owners.  One would think that living in the wealthiest nation on earth would provide greater support in a time such as this. One would have thought that we had the power to better protect the country from getting to its present state.

However, that is not the case. Small businesses are not being purchased. They are not successfully partnering up to any great extent. They are not restructuring under chapter 11 because they have no customers who will bring in revenue to support the restructure.

These businesses are simply going away in the wealthiest, most powerful nation on Earth. And it is a travesty.

Business Catalyst Masterclass

To give back to the small business community, we have developed the Business Catalyst Program to help you retrench, move your company forward, and bridge the gap from where you are today to where you want to go.

We still have a few spots left for the catalyst program. Register through this link, then once we review your application, we’ll let you know if your business qualifies for it.

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  • The Only Truths for Decision Making

The Only Truths for Decision Making

What every entrepreneur needs to know about their decision-making process

When speaking to entrepreneurs and people in general, for that matter, I find that they have many ways of sorting out how to make decisions. As a matter of fact, in a recent episode of Aepiphanni | Off the Cuff, Ingrid and I talked about that very topic and the different ways that we approach decision-making.

In the article, “10 Insightful Examples of Good Business Decision Making,” author Barry D Moore asks 10 entrepreneurs how they handled difficult situations in their businesses, many of which resonated with me, such as how to build a team, whether or not to get rid of a certain client or where to locate the business. While the Q&A was certainly interesting, both the process the author used and the differences in approaches each respondent used are worthy of considering.

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  • Ideas Amid Global Chaos

Ideas Amid Global Chaos

Identifying Innovative Business Ideas in a Volatile Economy

Recessions are often a time when potential entrepreneurs are hesitant to pursue a business idea. For some, this is a time best spent to keep finances on a tight leash and to build cash reserves. However, trying times does not always equal to unsuccessful business pursuits. Some companies may fall, but others unexpectedly rise.

One company that thrived during a recession is Uber, a ride-sharing app that launched back in 2009. Back in 2007 to 2009, the U.S. fell into what is called The Great Recession. GDP fell to 4.3% and unemployment reached 10%.

This did not stop Uber founders, Travis Kalanick and Garrett Camp, from launching Uber—a business idea they thought of after having difficulties getting a ride while they were in Paris. Fast forward to almost a decade later and the company reported that the app was used to book more than 10 billion trips since it was founded back in June 2018.

Entrepreneurship is still worth pushing for, even in a time of economic difficulties. This article gives some insight on how to find the next innovative business idea.

Take a look at what is lacking in the local community

One Entrepreneur.com article mentions that it is best to have a product that is a must-have rather than offer something that is just nice to have. Business owners are often problem-solvers and the company is more likely to be profitable if they work towards solving a consumer problem.

One example is Groupon, an e-commerce marketplace that connects subscribers with local merchants. It is an example of another business that was founded during the 2008 recession. Their main goal was to help revitalize local startups and boost cash flow when banks were reluctant to lend businesses money.

The idea was to promote the products of local businesses by offering a deal per day that will only go into effect once the offer has gotten a set amount of purchases. Groupon’s founders were not set on making a lot of money with this model but years later, they are now valued at $547 million.

This shows that having an innovation mindset is one key to success and starting small can make a big impact. From serving local entrepreneurs, Groupon’s services and offers went worldwide.

Being immersed in one community gives would-be entrepreneurs a pulse of the current local economy and what the people may need. Keep looking for what is lacking in the community. Then if it solves the problems of the consumers, there is a higher chance for a business to grow from there.

Use experiences as inspiration

CEO of Energent Media, Jennifer Spencer, once said that “finding a greater purpose in your work can make all the difference for your entrepreneurial efforts.”

While a thriving business stems from the ability to solve consumer needs, an idea will not miraculously turn into a business plan if the owner  is not passionate about it.

A survey conducted by Cox Business shows that more than half of the respondents, all business owners, founded their ventures because they were inspired by the opportunity to build something from scratch. Money was not a motivating factor and only 8% of respondents saw the financial opportunities as a plus.

Dane Strangler, a fellow at Bipartisan Policy Centre, states that the longest-lasting companies were started during economic downturns as they are tougher and nimbler. He calls it a “trial by fire” because these companies have to “scrape and scrimp” to achieve success.

This is why personal experiences can help push entrepreneurs further. Since these ideas were born from something that they personally found lacking in the market, they are more likely to back up and push this initiative forward.

Starting a business during a recession is possible as it is a time when gaps are created in the market and people are looking for innovation and a way to solve their problems. Other than assessing business models that are recession-proof, entrepreneurs who can identify what the market needs can get a head start in the industry.

Business Catalyst Masterclass

To give back to the small business community, we have developed the Business Catalyst Program to help you retrench, move your company forward, and bridge the gap from where you are today to where you want to go.

We still have a few spots left for the catalyst program. Register through this link, then once we review your application, we’ll let you know if your business qualifies for it.

Read More
  • Gaming the Virus to Win at Virtual Leadership

Gaming the Virus to Win at Virtual Leadership

Business leaders across the globe have seen global virtual teams (GVT) become the norm rather than the exception due to the world-wide Covid-19 pandemic. Working virtually has both benefits and drawbacks within a team structure. With video conferencing technologies and online data-sharing platforms already in place for most companies during the last 5-10 years, business teams easily transitioned to home-office environments as global shut-downs began. What proved challenging for team leaders, however, was how to manage and improve team engagement in a mandated virtual interaction world.

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