Key partners are companies or people outside your startup that may provide relevant value for your business model to be successful.
These partners have skills, resources, and knowledge that complement your startup’s strategy and close your business model gaps.
Suppliers, customers, or even competitors may become partners for lifelong or temporary partnerships.
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WHY IS IT A FUNDAMENTAL QUESTION?
Have you ever considered designing partnerships for your startup? No?! You should…
A well-crafted partnership unlocks hidden values between two different, but complementary businesses. Examples of these hidden values are:
- Access to partner’s customers: when customers of partner A are relevant for partner B too.
- Overall cost reduction: when the product or service of partner A, reduces the overall costs of partner B.
- Enhanced overall value proposition: when the product or service of partner A enhances the attributes valued by customers of partner B.
- Sales volume: when partner A benefits from a significantly higher volume of sales to partner B.
- Exclusivity: when partner A locks partner B from selling to or buying from other companies.
- Technology: when partner A benefits directly from licensing a technology provided by partner B.
Therefore, by developing potential partnerships, you discover new ways of leveraging your startup’s results.
On the other hand, if you decide to ignore partnerships, and your competitors don’t, you’ll raise the risks of being beaten by them.
A great example of a successful partnership comes from my interview with Faizan Aslam, co-founder of Bookme—a Pakistani e-ticketing platform:
At that point, we’re the first online ticketing company of Pakistan and the company who had real customers. We went to the distributors and said: “We can help you growing your customer base and, in return, you have to use Bookme as a call to action in all your trailers, marketing and everything.”
Distributors accepted the deal and started showing Bookme’s logo in their trailers. Consequently, consumers began to recognize the brand, and the company started seeing traction:
So, I think it was that perception that you were able to make in general public: “Their logo is being played on the TV” or “They are being advertised on TV. They must be a very big company”.
FINDING THE ANSWER
First of all, look at the business model elements you’ve designed so far. Based on your business dynamics, identify what actions or conditions could leverage your startup’s results.
For example, if you’re selling to big customers, exclusivity is a shield for your startup against other competitors. Or if your value proposition is based on low-price offers, a partnership to reduce your overall costs is extremely valuable.
Based on these valuable actions, map all the companies or people that could provide them for you. List all the potential partners’ names.
Now, it’s time to think about how your startup can provide value to their businesses too. A clear understanding of your value in the partnership will help you on improving your negotiation with your potential partners.
Finally, identify the best alternatives in the market for your startup and your partners to get the same kind of value.
For instance, if there is a great technology you want to license, identify what would be the best alternative if you couldn’t do that partnership. This will help you understand how valuable each partnership really is. A much worse alternative means the partnership is extremely valuable.
In summary:
- Identify actions or conditions that enhance your business model results;
- Find potential partners that may provide you with these conditions;
- Identify actions or conditions YOU could provide to those partners;
- Map the best alternatives for both parties to understand partnership value.
Go ahead. Start your work to answer the question about your startup’s key partners. Come back here, when you’ve finished.
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