Should Your Company Partner Up? Probably, But Consider These Factors

Here are a few things to consider when deciding whether to shake hands on a business partnership.

partnership

There are many types of business partnerships: marketing, financial, legal—and, of course, integrations partnerships are particularly relevant to software professionals. “Successful integrations” might bring to mind players like Nike/Apple (“fitness gear” plus “iPhone”) or Uber/Spotify (“rideshare” plus “your playlist”). But smaller businesses don’t have budgets for the high-priced lawyers and consultants that multi-billion dollar firms hire to counsel them on joint ventures. Without those big-ticket advisors, how should you weigh benefits against costs? Here are a few things to consider when deciding whether to shake hands on an arrangement.

PRO #1: ADDED FEATURES/FUNCTIONS

In some industries, partners with strong networking, marketing, or brand awareness might be vitally important. For software, though, let’s look at “what improvements can they bring to our product?” Does your software need social media integration? Would your customers prefer to track purchases within your app instead of externally? By joining forces with experts instead of building from scratch, your offering can have those bells and whistles needed to beat the competition. Be aware, though, that the quality of a partner’s offering directly impacts customers’ perceptions of you. For example, will their customer service quality reflect well or poorly on your product?

PRO #2: NO NEED TO REINVENT THE WHEEL

As Steve Jobs said, “Do not try to do everything. Do one thing well.” You already do something well; focus on that and enjoy opportunities to choose “best fit” partners. As an example, let’s talk about most people’s main concern: getting paid. Some software monetizes with ads while others accept payments for SAAS/products/services directly. And, of course, given the complicated logistics and regulations involved, payments aren’t easy to manage in-house.

When considering partnering for complex processes, there are seemingly endless variables. Like the software industry, payments require a high degree of agility. Should transactions be embedded, redirected, or via link? Where is data stored, with what security? Does the processor have top-tier gold star customer service and PCI compliance assistance? Does the integration take weeks or months? Partnerships in any new industry require reading up, so you’d be wise to seek out valuable industry context for these decisions. But your tough questions will pay off! Mr. Jobs was only one of many authorities who preach against spreading your expertise too thin, so get out there and find the experts you need.

Incidentally, when evaluating similar-looking partnership offers, choose a logical methodology to make comparisons; for example, assign mathematical weights to each variable by order of importance.

PRO #3: SHARED PROBLEM SOLVING

Cooperation really pays off when others return the favor. If you’re up against a challenge, additional teammates become your best resource. Sharing tasks lightens tangible burdens, but don’t undervalue the importance of sharing intellectual work. Having collaborators outside your company brings fresh perspectives and insights, unbiased evaluations, or even uncomfortable reality checks. Partners can point you toward new opportunities or advise against potential mistakes, and that reciprocity is priceless.

But those communication benefits come with obligations…

CON #1: NEED FOR EXPLICIT COMMUNICATION

If you are considering allying with another business, discuss each leader’s expectations beforehand and make sure they’re compatible. Most importantly, lay out every detail of the agreement in a “prenup” document that includes plans for how to settle disagreements. The lack of a clear roadmap to navigate conflict can quickly turn “pros” into “cons.” In addition to these pre-agreement discussions, it’s vital to keep inter-company communications ongoing and proactive. Much like getting married or becoming roommates, company partnerships come with responsibilities, not just perks.

CON #2: LESS AUTONOMY

Replace “wholly independent decisions” with “considering your partners’ needs.” You’ll be obligated to work together towards solutions—even when your views differ sharply. There’s also the chance their priorities will someday clash a little (or a lot) with your own. There might also be a higher headcount of stakeholders to consult for project decision-making, which can be a handicap in fast-moving industries.

CON #3: UNKNOWN RISKS

The expression “Caesar’s wife must be above suspicion” is used when cutting ties to preserve a reputation. PR fallout can be disastrous even if you’re unaware of a partner’s unethical dealings. Since you can’t know all of a company’s inner workings, practice due diligence regarding their transparency and honesty.

Do “pros” of collaboration outweigh “cons?” Generally speaking, they definitely do—if you choose good teammates! It made sense for Sumerian merchants to form international trade partnerships 5,000 years ago, so it appears that the proverb “many hands make light work” is hardwired in human nature. Any joint venture has potential drawbacks, but with good research, planning, and communication, you’ll find the right partner to elevate your business to the next level.

Dan Viscount

Dan Viscount serves as Co-General Manager and Senior VP of Integrated Payments at EVO Payments. A 25-year industry veteran, he is passionate about forging mutually beneficial relationships to integrate EVO’s capabilities into third-party software solutions.


Dan Viscount serves as Co-General Manager and Senior VP of Integrated Payments at EVO Payments. A 25-year industry veteran, he is passionate about forging mutually beneficial relationships to integrate EVO’s capabilities into third-party software solutions.