Forming a Business Partnership in a 3-Step Plan
Like any strategic business activity, partnership allows business owners to build a robust foundation for reaching success of the overall business strategy and goals. The activity for forming strategic business partnership helps managers to plan a tactic to meet long-term goals. If you’re a business owner and think about strategic business partnership, I suggest you take your time to think about the opportunities of partnering with others. Perhaps, your small company requires a winning business partnership, so be ready to analyze the current market situation and consider developing a business partnership plan. In this article we’ll talk about the definition of business partnership and review the key steps for developing a template of partnership plan.
What is Strategic Business Partnership?
The term “business partnership” means a formal arrangement and a kind of business collaboration between at least two business owners who agree upon the business cooperation for realizing common benefits and achieving strategic goals, and to share the losses and profits of the partnering business entity. The owners (strategic partners) commit to making a contribution (finance, technology, property, advice etc.) to the new joint venture and sharing the liabilities and responsibilities. The idea of strategic business partnership consists in providing benefits that the partners receive in the form of new opportunities for developing and growing their existing businesses.
There are three partnership forms:
- General Partnership (GP)
- Limited Partnership (LP)
- Limited Liability Partnership (LLP)
Each of the forms provides strategic partners with specific benefits and requires commitment to liabilities and responsibilities. The level of responsibilities will depend upon the selected partnership form (for example, the GP form requires the general partners to take equal liabilities for risks, while the LP form lets the limited partners restrict the personal liability to the amount of the resources invested in the joint venture by each partner.)
In order for strategic partners to deal with each other, they have to make a partnership agreement. Often when several owners decide on forming a business partnership they use sample contracts and agreements that are available in Internet. You can also use the web search to find a template of business partnership contracts that are valid to your country (remember usually each country has unique legal requirements to starting business partnerships). Below in this article we will review the key steps for developing a business partnership plan. You can follow those steps to plan for winning relationships with future strategic partners of your organization.
Developing the Plan
- Analyze Market Situation
The step requires you to make an analysis of the situation your business happens to operate in. You can use SWOT analysis (or other kinds of environmental analysis) to review competitors and investigate their strengths and weaknesses. Your business partnership plan will be comprehensive if you determine the competitive advantages of your company and then find potential partners who’re ready to achieve mutual interests.
- List Strategic Partners
Once the situation is analyzed, now you can try to make a list of strategic partners who will share your business initiative. Communicate and negotiate with the potential partners. Then in your partnership plan you need to list all the partners who have expressed their interests in the idea. Also don’t forget to negotiate on the partnership form that will be best fitting to all the participants of the future business entity.
- Define Goals
The next step in developing the partnership plan requires you and other participants to set goals for the partnership initiative. Remember that those goals should be set in accordance with the business management strategy of your company (the same requirement is for your strategic partners). Also there’s a need to determine deadlines and set quantifiable goals. Once defined, add the goals to your plan.
- Define Success Criteria
You can’t achieve the goals having no idea of success. This step requires you to specify success criteria. For examples, your success criteria might be:
- Expected profits gained from distribution channel of the partnership
- Expected number of targeted customers visited your company’s website
- An increase in sales (easily measured with a budget app package)
Now it’s time to think about real actions you and your partners can take to implement the goals of the strategic business partnership. You’ll need to negotiate with the partners and take a common decision regarding the first steps of the implementation process. In your partnership plan template, you can outline an agreed implementation scheme that includes tactical steps for realizing the partnership benefits and goals. And the success criteria will be the indication of performance.
- Make Commitment
Once the implementation scheme is designed and agreed, the final step in developing the business partnership plan template requires each partner to make a commitment to the joint venture. You and the rest participants must commit to supporting the partnership team through making investment in the venture and allocating resources. A business partnership agreement will be the reference point for regulating the commitment.