When operating a business, the time may come where growth in your business is either:
- Stopping completely
- Beginning to decrease slowly or
- Growing less than previous quarters
You’ve exhausted your marketing efforts, your customers are drying up, and all of the different sales channels you hit aren’t making any direct impact on your revenues. Scary!
If you’re a business owner and your business isn’t growing at a rate of at least 2-3% a year, your profits are being slowly eroded by inflation. And with a lack of growth or stable customer base, the economy can go into a recession which could severely limit the financial sustainability of your business.
So what do you do?
One tactic and the theme of this article is in undertaking partnerships. Partnerships can be used to grow your business and in some cases protect the core business by leveraging the talents and product/service features of another company.
I’ll explain more below on three different types of partnerships, keeping in mind this is not an exhaustive list of partnerships and there are more ways to use partnerships to grow your business than just the ones listed here.
Strategic Marketing and Referral Partnership
This is where customer referral agreements are put in place with another company to direct customers to your product or service.
Example: Realtors provide services for prospective property buyers and sellers, but also typically refer you to other services that are involved in the home buying process. Lawyers, home inspectors, cleaners are great examples of referral agreements that are typically put into place with a realtor. This is one of the most basic types of partnerships but an important one that can provide additional revenue opportunities.
Integrating another company’s products and services into your product pipeline and branding
This type of partnership is quite common with companies that do millions of dollars in revenue a year, but it can also be applicable to small businesses depending on the product or service. An example is using ‘white labelled’ products, where you sell the product of another company but the product is sold and marketed under the marketing and brand of your company – you pay the other partner a commission for all items sold.
Example: You operate a local pub and you want to provide your own branded beer but you don’t have the resources, expertise, or current capacity to build this in-house. Your next step would be to reach out to beer suppliers/wholesalers and set up an agreement where you purchase wholesale supply of beer units but each unit is sold under the brand of the pub you operate.
Co-branding is when you provide a product or service that leverages multiple brands, including your own. It involves collaboration with another partner company to create an alliance to sell a product or service together. Each brand leverage the other partner’s audience and customer base.
Example: You operate a highway gas station that sells fuel, convenience store items, lottery tickets, and tobacco. Your customers often stop at the gas station to fuel up, get some rest and eat some food. You decide to build an additional area within the gas station that sells Tim Horton’s coffee, donuts, and tea. You are able to utilize the Tim Horton’s brand (a well recognized Canadian brand) while still selling the products from your gas station.
There are many other partnerships that I did not discuss in this article such as joint ventures, equity alliances, non-equity alliances, etc. But, the goal with any partnership is to do at least one of two things:
- Grow your revenue
- Optimize your cost structure
- Increase awareness of your brand within a different audience
You should analyze any future potential partnership based on the above criteria.
Final note: the goal with any partnership is to create a win-win situation, not a unilateral win-lose where one partner wins, and one partner loses. Both partners need to be happy with the partnership and need to bring something to the table that the other partner can leverage. If you are considering a partnership, you will want contractual terms so it is best that you use the services of a lawyer to draft up an agreement that supports a successful partnership.