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Wilbrecht Consulting

Helping entrepreneurial companies plan, re-position, and move forward for a successful future.

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Entrepreneurial Strategic Partnerships

Start-ups exist because of an unmet need in the marketplace and the relevant knowledge of an entrepreneur. However, once the start-up product or service has reached maturity and competitors appear, small entrepreneurial companies are usually faced with the difficult problem of finding profitable new products or services to offer. At this stage, with limited resources and markets, many companies fade away.

I've found that strategic partnerships with other small companies can provide needed new products and services. The key is that you have assets such as a trade reputation, sales offices, strategic factory location, certifications, etc. which are valuable to your prospective partner. In particular, this strategy works well when the strategic partner is a small, foreign company that wants to enter the North American market. Likewise, your product may need a partner to enter a foreign market.

Once a partnership is established, continued top management attention in both companies is required to make it work. Otherwise, one will probably begin to treat the other as a customer not entitled to internal information and plans. As partnerships have lives that may not survive a change in management, a pre-nuptial agreement is always a good idea.

When planning a new venture, create proprietary assets which will be of value at a later date to a potential strategic partner.

What is a strategic partnership and how does it work?

 

  • Not a process to gain a tactical advantage over a supplier
  • Not a method to realize short term gains in a difficult year
  • Long term commitment to work with another organization to improve profitability of both organizations by leveraging each organization’s resources
  • Intimate sharing of engineering, sales, marketing and manufacturing expertise
  • Can be a new company or an arms-length relationship
  • Willingness of top management to actively work as equals with the partner

 

Strategic Partnership SWOT

 

  • Strengths
    • Partnership of market niche leaders
    • Broader customer/market base
    • Increased activity with customers
    • Leverage existing resources
  • Weaknesses
    • Time required to adapt to a changing environment
    • Corporate culture issues
    • Reduced flexibility in setting priorities
    • Language/training issues
  • Opportunities
    • Serve new customers with new products
    • Develop products that combine the partners’ expertise
    • Reduce manufacturing expense
    • Become the customer’s “go to” supplier
  • Threats
    • Lack of active top management involvement
      • Changes in top management
      • Partnership not a key strategic initiative
      • Lack of buy-in by middle management
    • Mismatch of partners' strategic goals
      • Investment/Reward
    • Misuse of partner’s proprietary information