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Interview Patty

Five Tips to Build Business Alliances

Profitable Partnering

1. - Selecting a Partner. - Don't settle for more of the status quo.

A business alliance needs to be unusually profitable any new business generated by the alliance should beat your current margins in order to justify the effort. Investigate reputation. Yes, this is a business relationship, but it's the people behind the business who will make the arrangement work -- or not. "In alliances, as in marriages, there is no recovery from selecting the wrong spouse," Slowinski warns. "You can bring your company to its knees using alliances." Research whether the prospective partner deals honestly with associates, employees, and customers.

2. - Cutting a Deal. - In many respects, the most important moment of the alliance dance is the first, when you and an executive from your prospective partner (usually the head of the company or key business unit) sit down to discuss the opportunity at hand. This is your chance both to lay the foundation for a productive relationship and to uncover potential hazards. "The goal is to establish early on whether this is worth your time," says Matthew Sagal, also a partner at Alliance Management Group. "You're trying to avoid a long, drawn-out process that ends in failure."

Establish subjects and a timetable for the talks. You and your counterpart should next set an agenda for formal negotiations and agree broadly on the elements of a potential partnership. These should include the scope of the partnership; goals, roles, and obligations for each side; milestones and other operating details; rules for intellectual property (which can often be a sticking point -- see "How to Share Ideas,"); and financial arrangements. At the same time, outline a rough schedule for these negotiations to follow.

3. Making It Work. - New allies often find it difficult to actually work together, not least because of the differences in corporate cultures. The key conflict usually revolves around how decisions are made, says Slowinski, especially with companies of different sizes.

Plan the decision-making process. As early as possible, you and your counterpart should discuss the first major decisions on the horizon and how each company would normally make them -- the key people, the reporting lines and committees that will have to sign off -- and how long the process should take. Meet all your partners. You can also smooth the process of implementation with an orientation meeting for the rank and file of both parties immediately after the alliance is consummated. Here, the responsible managers introduce the alliance and explain its purpose and how it will work.

4. - How to Share Ideas. - Intellectual property, or IP -- whether it's a new technology or customer lists -- plays a complicated role in an alliance. On one hand, it often lies at the center of a joint venture. But most companies are used to keeping secrets secret -- and suddenly, employees are being asked to do otherwise. Here are two ways to avoid IP problems. Make it clear what you are sharing -- and what you are not. Partnerships can be quickly frustrated when rank-and-file employees aren't sure which intellectual property they can share with the other company. Explain how the company will protect its partner's intellectual assets. And it's worth keeping assets that may be shared separate from those that may not -- on a separate server, perhaps.

5. - Put it in Writing. - "If you don't have a written agreement, you have no agreement," says Barry Sloane. The document should encompass all the parties' legal obligations. If the allies have to come to other understandings -- over, say, a mission statement -- these should be attached to the contract in an appendix, says Lynch. Don't jump to conclusions. Beware, writes venture capitalist Guy Kawasaki in The Art of the Start, beginning the negotiation with a draft contract. The document can take on a life of its own and potentially upend the talks.

Source: INC

Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.

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