Top 10 Questions for Prospective Partnerships

My dad, the consumate entrepreneur, had a saying. It was more important to decline 1 bad business opportunity than taking on 10 good ones. When it comes to dating or potential partners, this holds true. The pain and agony is simply not worth the hassle.

10. What's the impact of the partnership to your business?

Get metrics. This determines how you stack-rank against the other existing and potential partnerships. Press for quanitiable figures--% of growth, % of over all revenue for the quarter/year. It the answer can't ge quantified because they "haven't run the numbers", get a sense of the important via a strategic or tactical perspective. e.g. Motorola told the CEO of France Lux Accessories that her design for their new phone would be strategic to winning over the 18-25 year old consumers. On the hand, a comment like "you are helping us satisfy an immediate customer situation" doesn't bode well for long term impact.

9. Will our partnership have a manager or executive sponsor?

Here again, the answer is a leading indicator of your position amongst many. If the CEO says he/she will be personally managing the efforts, it's important. If you are assigned a manager, director or other title, as the secondary question of:

8. How is the (title) partner manager goaled?

This varies widely from company to company, particularly from small-to-medium-to F500 firms. As a rule of thumb, the smaller the company, the bigger the focus on revenue, and short term at that. Medium to larger firms are looking at a kaliedescope of things-margin, time to market, market penetration. Connect the dots between the answers to this question, and #10. If the answers don't jibe, then explore the contradiction or holes, as they could be sympamatic of an unorganized partner effort. Which leads us to...

7. Where do we best fit in your partner program?

Do your homework before you have an initial conversation to determine where you would best fit in the program. Better yet, have an idea ready, and be prepared to better the standard program. This allows you to take advantage of existing partner programs, but get a little something extra.

6. Do you have a partner program established for (type of partnership discussion here)?

If you couldn't find a Partner section on the website, then you have to ask. You will benefit from the basic partner support elements. such as training, support, marketing, sales leads, field efforts and more. Most software companies, manufacturing and services businesses have broad partner and/or channel programs. The small the firm, the less structured and organized. That means you will have to do more work, and assume a bigger % of the cost burden.

5. How many other partners fit into this category?

Secondary questions include: how many in our specific target market, with our product line, etc etc. This qualifying question continues to narrow down your strategic impact on the busines, enabling you to determine if the partnership is more advantageous for you, or the prospective partner. If you have fill uot an on-line partner application, and get to the point where it says "Tier 1", "Tier 2" or "Tier 3", it's a good indication you are going to be working against hundreds, if not thousands, potential competitors.

4. What are your expectations beyond the stated partner goals?

At this point, you should have a clear idea of quantifiable metrics. Now you want to get to something that is the #1 reason for partnership failures: Missed Expectations. This has nothing and everything to do with the revenue numbers. It's the unquantifiables such as: response time, customer feedback, professionalism, product innovation and the like. The best way to ensure expectations are met is to get the business plan and expectations on the same page. Do you level best to get this done up front.

3. How is the partner manager (at their organization) compensated?

Now, if it's the CEO, don't bother, he/she owns the company. And the uniitiated reader might think this question is essentilaly the same as #9. It's not. In fact, the larger the organization, the wider the gap between the two (anothe rule of thumb). Take Microsoft. A partner manager may have a goal to increase revenue per partner for the year, but the compensation plan is actually around the % of the product that is pushed on a new product line. This means you, as the small software firm, might push boatloads of Vista, but the partners' comp plan may rest on licenses of SQL server. Help yourself and Help your prospective partner by getting down to the nitty gritty as soon as possible. Be prepared to share w/the partner your own comp plans as well.

2. What are the attributes of your most successful , long-term partnerships that match what we are discussing?

This is all about getting comparatives, validating what has been previously discussed and ensuring the expectations line up. It also provides a reference point for knowing if the road has been traveled before (with success vs. faliure) or if you are going to building the road with the partner.

1. Is there an opportunity for an investment, and/or acquisition?

If the anwers to this positive, the strategic and tactical objectives line up, the product/service offering is unique and compelling, and you are looking/wanting capital or a potential exit strategy, this is a completely reasonable question.--unless of couse, then you don't want either from the partner. If the industry is up and coming-like nanotechnology-then a partial acquisition makes a lot of sense.

0. Where do we sign? No seriously, The next steps are....do you concur?

During the conversation, you should have captured the answers, assembled a checklist of to-do's, must-have's and discussion points to move forward. Go through the list for validation, THEN get owners, assign dates and reconfirm the dates. This means you will drive the relationship forward to your timeframe.

Comments? Experiences, Email me at sarahg@bmginc.com