Partnerships -- whether they're with a co-founder or an external company -- can play a huge role in propelling a business's growth. Partners can bring expertise, funding and name recognition that can't be spun out of thin air.
But partners can also ruin the best-laid plans. Some estimates show that up to 70 percent of business partnerships fail according to Paul Brunswick, co-author of Building Powerful Strategic Alliances. This means they can not only drain you of time and money, but they can also sabotage your business if you don't choose wisely. Partnerships are built to be powerful, but that's a double-edged sword.
If your business is focusing this year's growth on a partnership, there are a few steps you can take to make sure the partnership is one of the best things you've done for your company -- not one of the worst.
1. Look for partners who fill in gaps. Partners who can do what you can't -- or who can invest time in the things you shouldn't -- can be a godsend. If you're a big-picture thinker, it's good to partner with a detail-oriented person; if your team has mastered the creative side of things but struggles with distribution, you'll want to join forces with a distribution powerhouse.
For example, FutureFuel.io is a fintech platform designed to help employers help employees pay down their student debt. While this is cause is great in and of itself, it wouldn't make an impact without financial services and tech partners to create opportunities. And those opportunities go both ways: Travis Burke, the VP of corporate development for Ultimate Software, says the partnership enables his company to increase the number of cloud solutions it offers its customers.
2. Link yourself only to partners who can be trusted. Expertise and connections can be huge assets in building your business, but they don't mean much if the person or organization offering them can't be trusted. Two-faced partners can make promises you won't be able to keep, overextend your resources or even deliberately give others an advantage on the basis of your partnership. You want high growth, but you don't want it at the expense of your company's future.
One founder who's been there says it's important to create distance immediately if you sense a partner isn't being honest. "When a story or terms change after the first communication, it's a strong signal that you should walk away and not waste more time pursuing the relationship. Forget a three-strikes policy. With me, it's one strike and you're out," explained Jonathan Long, the founder of Market Domination Media. "There are plenty of potential partners and vendors. Don't waste your time with ones who aren't 100 percent honest and upfront from the beginning."
3. Seek partners who are collaborative and growth-oriented. I don't mean "growth" in terms of company revenue -- I mean growth in terms of understanding that everyone is in a constant process of improving. Partners who expect perfection out of the gate or who want to limit your partnership's growth out of fear or a risk aversion can actually hold you back. If they're not willing to collaborate with you, they're not really partners: They're just witnesses to your growth.
I ran into this once with a prospective partner. As we discussed various projects that our teams could combine on, I got the sense that the partner expected a bigger contribution from my team. I started digging into this expectation by asking some questions, and it finally became apparent that the other company had never done any work in this area. The other company's founder wanted to see how our efforts panned out before investing lots of time and money. It felt like we would be taking on all the risk and then letting someone else ride our coattails. I decided not to work together.
Partnerships can inspire tremendous growth, but they can also lead to devastating failure. If partnerships play a part in your company's growth this year, make sure you've located the right partners from the outset. Otherwise, you may just become a statistic.