Gaining foothold in new marketsFor many SMEs, leveraging an established brand’s resources can be a very effective strategy for establishing foothold in a new market. Why is this? Because the business gains association with, and endorsement from, a brand that the market already trusts and recognises. This means there is often less perceived risk associated with the company’s new product or service – and therefore likely greater uptake from other businesses and/or consumers. They can also allow businesses to share knowledge, skills and expertise in a mutually beneficial way. A partnership will result in a greater range of resources being available to both businesses, which can help to supplement weaknesses and build on strengths. Despite the advantages, it is important to realise that partnerships also come with inherent risks and drawbacks – and indeed, don’t always go according to plan. As such, it’s wise for businesses to be transparent from the outset and to ascertain whether potential partners have a strategic market presence and easily leveraged brand. Critically, making some money should also be on the partnership’s agenda; there should be a clear opportunity to increase revenue.
It’s a family affairIn effect, a partnership is an extension of an organisation. As such, it is vital for businesses to take the time to learn about each other’s mission, styles and brand propositions early on in the relationship. Doing this during the discovery period can help to ensure that values are upheld and that both partners continue to appeal to their target markets later down the track. When the market suspects that something’s amiss between two corporate partners, a considerable amount of damage can be done to one or both brands. The brands may appear to be “selling out” and audiences can easily become alienated from each partner’s values. This was shown last year when Girl Scouts entered into a partnership with American toy manufacturer Mattel to produce a range of Barbie-themed products. The partnership sparked claims from advocacy groups that Mattel was “[undermining] the Girl Scouts’ vital mission to build girls of courage, confidence and character”.
Sign the dotted lineIt can be tempting for businesses – especially startups – to jump at the chance to partner with any company to foster growth. However, it is important for any potential partnership to be underpinned by due diligence, consideration and legal protection. In particular, both businesses should be clear on the potential benefits and limits of their partnership. It’s wise to devise a plan and sign a contract outlining the intended scope of the partnership, including rights and responsibilities. This covers details such as guidelines, payments, risks, rewards and service-level agreements. It helps to reduce any possible ambiguities and ensure that both companies – and their consumers – are both happy and certain about what the partnership represents. Read more on business growth:
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