When people think of business relationships, they often think of competition. After all, if your company is making as much revenue as it can, it’s costing other company’s money. Or, you might think of contracted services, like hiring another company to distribute your product.
But there are other types of partnerships that businesses can engage in. Business development is a term that describes the formation of these relationships. It can sometimes refer to sales relationships, including contracted services and the sales of raw materials or component parts. But more frequently, it describes the formation of mutually beneficial business relationships between businesses in related, but not competing, areas.
How do you form these types of business partnerships?
Think of what types of businesses it would benefit you to partner with. Sometimes, there is an obvious answer. For example, if you run a pet grooming business, forging a partnership with a pet store makes sense and could drive a lot of customers to your business. Other times, it may take more brainstorming. Think about where your product or service is sold, who it benefits, and what else the people who purchase it might need.
Once you’ve come up with some possibilities, reverse it and think of how your potential partners would benefit from doing business with you. The best partnerships are the ones in which everyone wins.
Don’t make too many partnerships, as that can complicate the priorities of your business. If there are many possibilities, really consider which ones will be the most beneficial to make. But that said, don’t enter into any exclusive partnerships. Even if you only intend to partner with one other company, you don’t know what the future needs of your company will be, and you don’t want to agree to something you’ll regret in the future.
And on that note, make sure that you have an exit strategy if a partnership doesn’t work out. Talk to potential partners about how to create a mutually useful and fair exit strategy, in case of a future conflict of company values, or simply a change in what your company needs.
A good partner’s business will often overlap with yours. Be wary of that overlap, and be careful not to overstep your bounds. If you run a pet grooming business, you might sell dog toys on the side. But if you decide to partner with a pet store for extra customers, it might be wise to discontinue this, or sell only a limited stock, or buy the toys through the store’s supplier. Discuss areas of potential competition with potential partners to see if you can come up with a mutually amenable agreement.