A large portion of our growth over the past year can be attributed to the key partnerships we formed. Needless to say, it hasn’t always been easy and we’ve learnt a lot over the last year. I hope you find these learnings useful.
As an entrepreneur, the thought of putting part of your business, brand, or reputation in someone else’s hands can be daunting. There is a lot that can go wrong so it’s important to know what you hope to get out of it.
Partnerships can help you achieve more with less by leveraging the existing capability of another aligned company or product, in doing so, fast-tracking the achievement of your business goals – which could be anything from growing your customer base, to improving your product offering. Granted this sounds straightforward but in reality, it is one of the more challenging aspects of growing your business.
Steps to building a successful partnership
If you’re ready to take the plunge, let’s look at a few steps you should take to building a solid beneficial partnership.
1. Start with your business goals
We briefly mentioned the different ways partnerships could benefit your business, but where and how do you do this? Always start by looking at your business goals, and establish exactly what you would like to achieve at this stage of your business lifecycle?
It could be any goal that is most relevant to your business, or perhaps one of the below listed goals:
- Increase reach in your current target audience.
- Enter a new market or reach a new audience.
- Reduce costs and improve efficiency.
- Improve your overall service or product offering.
Think long and hard about this to avoid spending time and resources on non-critical goals, and of course, the goal/s selected should be realistic and achievable within a predetermined time frame.
2. Assess your capabilities and gaps
Figure out what you do well, and where you could use a hand. Partnerships need to be complementary – ensuring that each side brings something of equal value to the table. This is essential for you decide on the type of partnership you want, define the role each one of you plays in the customer’s lives, as well as the economics of the partnership.
Holding on to what you are great at not only makes you a more attractive partner, it ensures you core assets are protected. Remember, these core assets have been the source of your success to date, and more than likely, you future successes.
3. Decide on the types of partnerships needed
There are a multitude of partnership options out there, and of course, you can always craft your own to suit your unique needs.
As a starting point, here are a few to consider:
- Sales Partnerships: You have a great product and would like to extend your reach. A channel partner will sell your products alongside their own, which can be a great way to quickly and affordably scale your top line. If you’ve only sold online before think about expanding into the physical space through a partner and vice versa. Yoco was purely online based until we partnered with DigiCape and We-fix. Read this article for advice on selling on consignment.
- Marketing, events and co-branding partnerships: Are you purely interested in using each other’s networks to get your brand out and increase sales? Co-host events to ensure a larger turnout or start small by organising online twitter chats with like-minded business owners.
- Product collaborations / integrations: If you do paintings or illustrations and want to generate a new revenue stream, consider partnering with someone who creates custom furniture, bags or clothing. Add your designs to their products to create something unique. Since the beginning, Yoco was built to enable integration partnerships, and to date, we successfully integrate with industry greats such as TabletPOS – a cloud-based restaurant POS system, and Xero online accounting software.
The key to a successful partnership is to always link it back to your goals and capabilities.
4. Aim for the Triple Win
The best partnerships result in a Triple Win – for you, your partner and your customers.
A win has to be quantifiable, but does not need to be strictly financial – this is where we see mistakes happen. It’s great if a partner gets a commission from you, but commissions alone do not constitute a good enough base for a long-term partnership. For the partnership to last, there needs to be a synergy. This means that beyond short-term financial gains, a good partnership strengthens the core offering of every partner.
Case example: Yoco & TabletPOS
In the early days, our goals were to increase transaction volume and grow our brand visibility. At the time, we knew that restaurants would be a great fit for us because everyone needs to eat, and this means lots of transactions and even more brand visibility. We also knew that a card payment solution integrated into a restaurant’s Point-of-Sale would save the business hours each week on cash-up and admin. At that stage, our Point-of-Sale app did not have the features that restaurants needed, however we built our platform to be open, meaning any 3rd party POS could seamlessly integrate Yoco card payments. This resulted in our partnership with TabletPOS, who in addition to having a leading restaurant POS, worked with a large number of restaurants already.
With a few lines of code, we integrated our card payment solution with their POS system and were able to provide hundreds of restaurants with a single, fully integrated offer that created value for everyone involved.
- Yoco Win: Strengthened our product offering for restaurants and introduced us to a new market.
- TabletPOS Win: Direct financial incentive through commissions, and TabletPOS’s product experience improved with the integrated payments from Yoco, which helped retention and growth.
- Customer Win: Restaurant owners receive access to a first of its kind, fully integrated POS and payment solution.
Aim for the Triple Win and look beyond the short term financial gain.
5. Pick your partners carefully
Before you approach a company make sure that:
a) They are likely to be the best at meeting your goals and you can help with theirs (e.g. they have the widest reach or the strongest brand or the most solid product offering).
b) You believe you have a high chance of getting through to the right people and that they will make time for you.
These two things may often contradict one another. You may want to partner with Apple or Nike, but it may not happen anytime soon.
Be careful where you hedge your bets. No one likes to find out that they were your “second option.” So if your first try doesn’t work out – it may be harder to secure your second choice.
Here are a few things to consider:
- Are your company values aligned? If you’re Green Peace and they are Shell things simply won’t work out.
- Will this partnership be of equally high priority for them as it is for me?
- Do you have a common connection or someone who will introduce you to the right person? This will go a long way in establishing trust.
- What do your future partner’s customers really think of them? A quick search on Facebook or Hello Peter will give you a good idea.
- Is the timing right? Can you afford to invest the time now and do you think they are open to discussions now? If it’s their busy season it may be best to wait.
- What sort of partnerships have they done with others in the past?
Yoco’s collaboration with The Cape Craft and Design Institute (CCDI) is an example of how businesses in very different spaces can work together if they still have the same end goal. In this case, both Yoco and the CCDI are focused on enabling entrepreneurship. CCDI does this through support, workshops and funding. Yoco does this through technology designed for SME’s. Together we are both able to reach larger audiences with more well-rounded product offerings.
6. Lay out the responsibilities and expectations of each partner clearly
Partnerships may be started over a friendly, casual cup of coffee but it’s important to put down the coffee and pick up the pen sooner rather than later.
Not only will having everything in writing protect both parties, it also avoids any misunderstandings. An honest mistake or misunderstanding can often be the end of a valuable partnership.
Important things to include in your written agreement:
- The parties involved in the agreement
- The services to be performed by each partner
- The terms of the agreement (percentages of profit, method of billing, etc.)
- The reporting structure, person of contact, etc.
- The duration of the agreement
Finally, make sure the agreement is signed by the right person or people. Wherever possible make sure it’s the business owner or director.
7. Test things out by starting small
A wise man always checks the temperature of the bath water before jumping in. You can never be 100% sure how things will work out.
Plenty will be revealed as you start working together and for that you want to keep partnerships iterative and flexible, in order to constantly improve. Diving in head-first can be tempting, but it’s seldom the wise approach.
Giving yourselves a “testing phase” means you both have more flexibility to make needed changes. It also reminds you to keep reviewing the results. When the “test phase” ends you are forced to seriously review whether it is worthwhile continuing the partnership.
The agreement can make reference to a testing phase (perhaps 3 or 6 months depending on the type of business) after which there can be room to make revisions to the agreement where necessary.
Word of advice. Do NOT give away exclusive rights to a partner until you’ve completed a thorough testing phase and you know it is worthwhile. In fact, if you can, do not give away exclusive rights ever. The new way of partnering is to be the best at what you do and build strong relationships with like-minded players who can complement your offering. The partnership will then take care of itself.