By Ridge Yusuf
Forging partnerships to improve market penetration have become commonplace, especially for “new economic” businesses. And, most companies proudly mention many of their partnerships in their business plans.
The fact is, regardless of whom the partnership is, the partnership itself has no meaning. What is meaningful is the terms of partnership. For example, while it sounds good to have a partnership with the Fortune 500 company, the partnership details are what according to important investors. For example, investors will look bad in partnerships where Fortune 500 companies produce a 90% commission on referred customers. On the other hand, investors will be very similar to a fairer partnership.
Thus, be sure to detail the partnership specifications. These include factors such as how partnerships will work, payment terms, contract length, minimum and / or maximum guarantee, customer leads expected from each partner, payment time, etc. In addition, if the partnership is an important part of the business plan, expect wise investors to interview partners and examine partnership contracts.
Partnerships can be a major factor in the success of developing companies, providing leads, sales, capital and / or other important benefits. However, efforts must be careful not to emphasize one partner in their business plan. Partnership agreements, such as other legal agreements, can be violated, and if the venture position is one of the important partners for its success, this will be a risk factor for investors.
Overall, partners can provide a big boost for business growth. Business plans should not only discuss who these partners are, but detail the provisions of the partnership and how they will benefit the company. Finally, business plans should not be able to overcome one partner to convince investors that this business is able to succeed even without it.
