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How to Know If a Strategic Partnership Will Work Before It’s Even Started

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Lately, I’ve been doing a lot of work on strategic partnerships with my clients .

Given most of my clients are in a growth phase, it makes sense. There are numerous studies showing SPs providing anywhere between 20% – 50% of growth in new clients. Unless you’re going way outside the square to grow your business, you can’t afford to ignore them.

Thing is many simply struggle to make them work. The reasons? Well, when I go into businesses I often see one of a number of issues going on:

  • The firm has lots of informal partnerships – accountants, lawyers, mortgage brokers, general insurers etc. – but they produce a weak and/or inconsistent flow of referrals.
  • The partnerships they have are poorly matched. They’re basically “dating” businesses who they have little in common and share no common goals with.
  • Nobody has a clue, beyond the most superficial understanding, of what the other partner really does.
  • Expectations have never been set, which is nine-times-out-of-ten the seed of future issues.
  • There has never been discussion at a granular, operational level as to how it’s going to work.
  • One or both parties have assumed that financial incentive alone will drive the relationship. It’s very rare that it does, and even rarer that is does in any sustainable way.
     

By far the most common issue though is a lack of patience. Forming solid partnerships is a 2-4 month process if you do it properly. A lot of businesses fall down because they expect a partnership to start producing immediately, and they give up or reduce their efforts if it doesn’t do so. Oddly, the point many give up is often just before reaching the tipping point at which most partnerships begin to enter a phase of production.

I’ve found success in applying a very deliberate and unhurried process that incorporates four key steps. I call it the PTNR process.

  1. PROSPECT potential partners and find out where’s there’s a match and where not.
  2. TEST the relationship on paper, identifying if enough mutual value can be created.
  3. NURTURE the flow of clients, through identifying “referables” and upskilling each other.
  4. RELATIONSHIP management, through regular communication, reporting and training.
     

Underneath this process lies a series of exercises, conversations and agreements that move all partners toward a common purpose and operating model.

However, possibly one of the most important elements is asking five key questions at the end of Stage 1, prior to progressing any further.

  1. Do you connect as people?
  2. Do you share common business values?
  3. Do you share an interest in certain types of clients?
  4. Can you add value to each others businesses?
  5. Can you add value to each others clients?
     

These five questions, if answered completely honestly, save you a lot of time, money and wasted effort in trying to make SPs work when they truthfully don’t stand a chance.

Even where a business has long established partnerships, I still insist upon going back and asking the questions just as you would a new partner. The frequent result is the removal of one or more blocks that were stopping the partnership from blossoming.

Successful Strategic Partnerships, as I’m sure you know, are about people first. They are about connection, purpose, mutual value and common vision. Without these things, regardless of the potential financial upside, frankly you’re probably better off investing your time elsewhere. It’s going to be an uphill struggle to make it work.

Of course, there is much, much more than just this, including analysing client bases, educating partners, identifying how and when to refer, establishing reporting and knowing what terms to put forward. These are all things that I cover as part of my coaching too. It’s an interesting area and, in my experience, something that frequently separates hugely successful businesses from those who get just by.

Before all of that though, start with those five simple questions. If you can’t answer yes to at least 3 of them, consider whether you have the right strategic partner. In doing so, you will save yourself and your business a lot of pain and wasted effort.

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