Not too long ago I took a trip down to Salt Lake City for a conference. The thing I noticed having never been to Salt Lake City previously was the multitude of snow cone shops; they were virtually on every corner, everywhere you went snow cones. We were given a recommendation to a place called the Soho Food Park near the Airbnb where we were staying.
The guy who owned this particular snow cone shop had a brilliant idea he built in I believe it was six spaces maybe five for food trucks. These food trucks could come in they could plug into power ( as to not have to run their noisy generators) and serve food. Guess how many other snow cone shops can steal business from him?
When are we there had to be at least 100 people there, this guy had figured out a way to make his snow cone shop a destination by bringing in business partners. Oh, by the way, he got paid by those business partners too — so not only is he increasing the revenue on his snow cone shop, but he’s also raising his overall revenue by getting paid through a secondary source.
Business development involves strategically partnering with another company to benefit both businesses. With business development, you’re partnering to reach customers in a way that benefits both of you.
Here are some different types of partnerships:
A standard partnership is when two companies work together to make one or both of their products better by leveraging the unique capabilities of the other. For example, AOL and The Huffington Post entered into a standard partnership to improve their newsgathering and information services.
A joint venture is when two companies work together to create an entirely new product offering. These deals are often long-term and complex, but they don’t have to be; think of the deal between singer-turned-fashion-designer Carrie Underwood and Dick’s Sporting Goods to create attractive fitness gear suitable for young people.
Licensing works well when one company has a strong brand that the other company wants to use. An example would be a t-shirt manufacturer stocking shirts featuring popular sports teams.
In these deals, one party provides a product or service to the other in return for access to potential customers. One example of this is Lifebooker, which sells discounted beauty services from salons and spas directly to customers. Lifebooker gets a cut and the salon has a new customer.
This type of partnership helps you secure key inputs which are essential for certain products. For example, Amazon.com has a myriad of supply partners that keep them stocked with all their products across dozens of categories.
Good business development deals must help you hit your key metrics, whether growth, revenue or product-related. They align with your company and product strategy and are focused on critical project and distribution milestones. Understanding your partner’s goals is also fundamental to the success of any business development deal: you need to understand why a potential partner would want to work with you. What’s in it for them? And since not every partnership will work out, it’s a good idea to keep a long list of potential partners if you think a business development deal is a way forward for your company.
Thinking about business development what could you do today to create a strategic partnership with one or more vendors? You don’t have to sell snow cones or build a food park to figure out who has your customer before you and figure out how you can work with them.