This is a collaborative post
The partnership brings together all forms of association of two companies in order to achieve a common goal in business. There are many types of partnerships:
- The horizontal partnership between two companies of similar size. It therefore concerns the synergy of certain resources to conquer a new market or better, promote your business
- The vertical partnership, or asymmetric. This is for example a customer-supplier relationship that is consolidated into a satellite partnership, or a franchisor-franchisee relationship.
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Why develop a partnership?
The primary goal of business-to-business partnerships is generally to increase turnover. Bringing together two structures is therefore beneficial for their position in a given market. In addition, the partnership has the effect of reducing certain operating costs. Weak points in the business can now be assumed by a more efficient service from the partner, and vice versa. The partnership allows an exchange of good practices and know-how, often essential for young SMEs. However, business partnerships also exist between companies that have been around for many years. It depends on what the end goal is and how they can go about making it happen. Some of the benefits of this are varied. Let’s take a deeper look:
1- Sharing risks and responsibilities
The purpose of partnerships is not just to share the benefits. In this type of business-to-business relationship, the risks and responsibilities are not just for a part. Thus, the risks and the benefits are to be shared between the partners. Responsibilities are not from the rest. This is very visible in the case of a joint venture type partnership.
2- Increase in the investment rate
Forming a partnership is synonymous with investing in the common project. This fact leads to an increase in the investment rate of your business and by extension the increase in turnover. Note that it also allows you to reduce the operating costs of your business. You are therefore no longer exposed to financing difficulties. It is not a quick fix, but rather a type of aid.
3- Skills improvement
In a partnership relationship, you improve the skills of your staff and therefore of your company. The weak points of each company can be managed by the more competent services of the partner. During a partnership, there is an exchange of know-how and this is important for younger SMEs.
4- Expansion of the professional network
A lot of things are inherited from partnership. One of these elements is each other’s professional network. It is therefore advisable to study the professional network of your potential partner before committing to your partnership.
5- Support and motivation
In a partnership, each part is complementary and brings its share of knowledge. Exchange is at the heart of any partnership. In a horizontal partnership, we are in the presence of companies of the same size that will support each other in order to evolve.
However, the partnership does not only have advantages:
- Risk sharing between the two companies
- A commitment on both sides
- The possibility of conflict between partners, which could derail a trade union.
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3. How to find a partner for your SME
What is the ideal size for a partner? A moderate spread is always recommended, unless you are in a franchise or license situation (see below). Beyond a similar size, common values and culture are often essential for a successful partnership. To find your partner, you can start by studying:
- Their network of clients
- Their suppliers
- Their competitors.
Often the first contact is from marketing to marketing. A simple prospecting by phone and on the internet (Google searches, LinkedIn, Video, emails, etc.) can be very informative. Do not neglect trade fairs and conventions of the profession, which also make it possible to develop its networks.
4. The different forms of partnership between companies
- The joint venture consists in merging two companies to create a new one, or in having one company absorbed by another by acquiring a stake. These companies are often complementary, and allow them to gain market share while reducing their costs.
- A co-marketing or co-production (co-branding) operation enables mutual capitalization on the respective brand images. Thus, cooperation allows you to join forces to be stronger in a given market, without giving up the independence of your SME.
- The partnership in the form of a license consists in commercially exploiting the product of another company in a territory (country, region, etc.) where its SME is well established. The other company then receives dividends on the sales.
- The franchise goes further in the partnership. And supposes a transfer of products, but also of know-how, of dressing, etc. The specifications are often very strict. And involve a greater loss of autonomy for the SME.
Keep a partnership alive
A successful partnership between two companies begins within the company itself. It is about mobilizing its employees through internal communication. This is to promote cross-functional synergies with the services of the other company. It is very important to go beyond the simple collaboration of marketing departments. A partnership that spreads in your organization will put all the chances of success on its side. You can learn more about the benefits of partnership and advice on new business and partnerships and learn who are 1st Formations!
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What are the reasons for entering into a partnership?
In general, a business is probably looking for resources that allow them to carry out new actions or expand. Communicating about a partnership with an association also helps to strengthen institutional communication. Image of the oxymoron of not totally disinterested donation, the repercussions of sponsorship actions are often expected in terms of visibility in the media. Short-term commercial partnerships provide the association with high visibility on the company’s products. This communication strategy is useful for the company, because it allows it to expand its customer base by reaching new consumers or retaining old customers, by organizing jointly run events. The win-win perspective is pretty obvious to both parties if the communication goals are clearly displayed. Cooperation then gives rise to the creation of products “carried” by the image of the association: “shared products” for which a percentage of the sale price is donated or “dedicated products” specially designed. These partnerships are one-off operations which can constitute a first step towards a more integrated partnership. But there are plenty of other benefits, too! Let’s take a deeper look.
Facilitate relations with institutions and stakeholders
Local businesses are sensitive to these opportunities. Nearly half of donor businesses are therefore SMEs with fewer than 500 employees. The forms of these partnerships vary according to the “creativity” of the partners, but most often materialize in the form of events, creation of prizes and rewards (an opportunity to invite the various partners and to strengthen PR).
Finally, these three main approaches to partnership with associations, communicating differently, mobilizing employees and facilitating external relations. Often they refer to specific poles in the company. Including marketing department, human resources department, general management and therefore to different interlocutors. In the future, businesses can diversify and take new paths and find new audiences through partnerships. It can strengthen bonds, bring more jobs and ultimately provide better services or products to the buyers involved. It is a great way for businesses to put their heads together and make something special. People are constantly wanting new things and this way you can be sure that this will only continue to grow in the future. There can be no denying the need to expand and provide even better results. Companies will have to work harder to keep up with lots of things and new desires of customers/clients.
