How to Know If a Business Partnership Is Worth It

Making the decision to enter a strategic growth partnership with another company is not one to take lightly. According to Forbes, business partnerships can help increase a brand's revenue. For example, 95% of Microsoft's commercial revenue comes through its partner ecosystem. That system grows by 7,500 partners a month. There are many factors to consider when determining if this type of arrangement will truly benefit your business or if it's better to remain independent. As you weigh the pros and cons, here are some key things to look at.

Evaluate Compatibility

One of the most critical evaluations is how compatible your company is with the potential partner. Do you share similar missions, values, and priorities? Or is theirs drastically different from yours? If so, it likely won't be a strategic match despite other tempting factors. You also want to assess how your leadership styles might mesh. Maybe they have a very top-down approach while you lean toward employee empowerment. There could be room for conflict if such core operations aren't aligned. Taking time upfront to thoroughly understand one another's cultures can reveal dealbreakers.

Compare Market Reach

A major motivation behind a strategic growth partnership is gaining access to a larger customer base. Determine what unique market share each of you holds and how a partnership might expand its reach. You'll also want to look at geographic dispersion. If you only operate regionally, and they have a national scale, teaming up offers you the opportunity to grow. Just be sure that their positioning and brand reputation enhance rather than detract from perceptions of your company.

Analyze Resource Contributions

Take a careful look at what tangible and intangible assets each business brings to the table. This includes things like intellectual capital, proprietary technologies, production capabilities, specialized skills, established connections, etc. What strategic advantages might you leverage collectively that you can't access alone? Also, assess what capital contributions are expected. Some partnerships entail securing investors together, while others require upfront investments of cash, equipment, or property. Know exactly what and how much each party commits.

Finding the perfect business partner requires diligence and discernment. While the prospect of accelerated strategic growth can be enticing, ensuring values, priorities, and contributions align is key. Carefully weigh both tactical and instinctual considerations before moving forward to determine if a partnership will pay off long-term. If you're looking for advice about a strategic growth partnership, let us guide you. Call Kingsbridge Brokers today to get started.