Protect Your Business When Working With Partners

Fact: Working with complementary businesses is good for your business. A complementary relationship is one that makes both businesses stronger than they are individually. For example, a dietician who works with a local grocer to offer a healthy eating program has created a relationship that helps both parties.

 

Our view: When working with other businesses, hope for the best and plan for the worst. Forming relationships with complementary businesses is a key way to build your business. However, plan upfront for the inevitable bumps in the road.

 

Action: Six questions to discuss with the businesses you partner with:

1) How will we each protect our business image and identity? While you both have common interests, it's still important to protect the image and identity of your own business. For example, consider an agreement that requires your approval of joint marketing materials, including in-house promotional materials and radio and television advertising.

2) How will we make the relationship work? Spell out what each of you will do to help ensure results for the other. For example, you may promise to provide a written testimonial in exchange for placing your promotional materials in your partner's store. Your partner may agree to offer weekly nutrition seminars in exchange for your allowing the use of office space in your store to conduct metabolic assessments.

3) How will we measure the success of the relationship? It's important to define up front what specific results you each expect. For example, you may agree on goals for additional sales leads or revenues. Decide how - and how often - you'll each report on the results. Many businesses overlook this step. However, you shouldn't invest time in a relationship that doesn't produce business results.

4) How will we handle a change in plans? Consider agreeing to notify each other in advance of any significant business changes. Examples include closing the business, opening or closing a branch, shifting business focus, perhaps even losing a key employee or customer.

 

5) How will we handle changes that we don't control? External influences always pop up unexpectedly. For example, demographics change and your businesses don't "fit" as well. Store traffic suddenly drops off because of road construction. Since it may not be possible to provide notice of events you can't control, the termination provisions we discuss below may be helpful.

 

6) How will we end the relationship? Perhaps your business direction changes, or hoped-for results don't materialize. Agree upfront on a termination process that reduces business disruption. For example, you may need time to develop an alternate source for sales leads. A notice period gives you time to make those changes. In lieu of notice, a termination fee may be an acceptable alternative.

Give us a call at 972-851-0098 if you have a question about how to make these relationships work - we'd be happy to spend a few minutes discussing your specific situation. We also recommend that you work with your attorney to make sure that important agreements are legally enforceable.

(c) 2005