Forging partnerships to improve market penetration has become
commonplace, particularly for “new economy” businesses. And,
most companies proudly mention their many partnerships in their
business plans.
The fact is that, regardless of whom the partnership is with,
partnerships by themselves are meaningless. What are meaningful
are the terms of the partnership. For instance, while it sounds
great to have a partnership with a Fortune 500 company, the
details of the partnership are what investors find important.
For instance, investors will look poorly upon a partnership in
which the Fortune 500 company earns 90% commissions on customers
it refers. On the other hand, investors would look favorably
upon a more equitable partnership.
As such, be sure to detail the specifics of the partnerships.
This includes factors such as how the partnership will work,
payment terms, contract length, minimum and/or maximum
guarantees, the type of customer leads expected from each
partner, timing of payments, etc. In addition, if partnerships
are a key part of the business plan, expect prudent investors to
interview the partners and scrutinize partnership contracts.
Partnerships can be a major factor in the success of growing
companies, providing leads, sales, capital and/or other critical
benefits. However, ventures should be careful not to place too
much emphasis on any one partner in their business plan.
Partnership agreements, like other legal agreements, can be
breached, and if the venture positions any one partner as
critical to its success, this will become a risk factor to
investors.
Overall, partners can provide a great boost to growing ventures.
Business plans should not only discuss who the partners are, but
detail the terms of the partnerships and how they will benefit
the company. Finally, the business plan must not place too much
emphasis on any one partner in order to convince investors that
the business is capable of success even without it.
About Author :
As President of Growthink
Business Plans, Dave Lavinsky has helped the company become
one of the premier business plan development firms. Since its
inception, Growthink has developed over 200 business plans.
Growthink clients have collectively raised over $750 million in
financing, launched numerous new product and service lines and
gained competitive advantage and market share.
