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The successful partnership, of course, is one in which both sides bring something of value, leading to next step: R, for Reciprocity. Is there any aspect of their business that competes with any aspect of yours? Is buying or borrowing partnerís product/service more cost-efficient that building it yourself? In perfect world, both businesses are complimentary and you can each sell to otherís customers. In semi-perfect world, one of you has something that otherís customers need and buyer gets a cut of revenue. In world to avoid, a potential partner is too closely aligned to your core business and will likely become a competitor. One partner offers merchant accounts that online stores use in order to process credit cards, a natural tie-in for AIT to offer its customers who use their web sites to make sales. This company wanted an exclusive agreement, and one that had a non-compete clause in it. It wasnít long before their repertoire expanded to include hosting, making non-compete a very dangerous part of agreement. Eggo, waffle-maker, recently went into syrup market, which its own commercials depict as a no-brainer of a decision. Now, imagine that youíre Log Cabin or another syrup maker, and you had a co-marketing arrangement with Eggo. How valuable would that deal now be?
Be wary of any deal points in which ownership of customer, exclusivity, or length are issues, bringing up ďEĒ for Escape. Is potential partner in a hurry to close a deal? Is there an upfront or setup cost? Any partnership agreement must have a clause that allows for reasonable termination in case deal sours, or if cooperation becomes competition. Some years ago, one company dominated domain registration, and mindful of both its monopoly and coming of de-regulation, this company offered providers like AIT long-term partner agreements. AIT also anticipated de-regulation, and modified its agreement to a month-to-month basis while creating its own accredited domain registration company. That company has since added web design and hosting, making them a direct competitor and confirming importance of escape clause.
Partnerships have become a fact of business as companies look for ways of developing new customers and giving existing clients more reasons to stay. Theyíre also a catalyst for serious self-analysis: being sure of who and what your company is, and equally important, who and what it is not. A little introspection is vital in determining how to responds to current trends and how to be pro-active in planning for what your customers will expect next. So after those initial dinners and late-night phone calls, make sure you follow through with details like due diligence, checking of references, and using Internet for research. Just as right partnership can be rewarding, wrong one can be disastrous.
Alex Lekas is the VP / Corporate Communications for AIT (http:www.ait.com), a provider of hosting and Internet services to more than 190,000 business domains around the world.