Guest author Scott Gerber is founder of the Young Entrepreneur Council.
Partnering with another company can be great for both parties involved—or it can end in disaster. Collaboration can be tempting for a quick sales fix, but do your due diligence first.
To learn more, we polled eight members of Young Entrepreneur Council (YEC) on the questions you should ask before saying yes to collaboration, and the red flags to look out for during early discussions. Their best answers are below.
Figure Out Why They Want to Collaborate
Sometimes the answer is as simple as “to increase sales.” But sometimes it’s because of an internal political struggle, a desire to compete with you, or even just to look like they are doing something.
Beware of people who seem to be too eager to work with you. That usually fizzles out at some point, either quickly or after they have wasted a lot of your time.
—Jessica Richman, UBiome
Work With Doers
Ideas are easy. Everyone has them.
If you’re talking with a company and their focus is strictly on how big and successful the partnership will be, but there is no discussion about how the partnership will actually happen in reality, run and hide. These are talkers, not doers.
Look at the Size of the Project
I like a challenge, but I also think it’s prudent to first prove the need. If a company proposes a collaboration in which both parties would be required to invest 40 hours of work, be prepared to rebut with an idea that will only take five hours of work.
If that’s successful, then you can build up to bigger projects. Otherwise, you’ll risk having wasted time on something that ultimately offers little to no ROI. Businesses can fall victim to their own ambition, so beware of the delusional entrepreneur who dreams up new “winning ideas” every few minutes.
Don’t Put All Your Eggs in One Basket
It’s important to make sure the collaboration is on brand for both companies. One party will always have slightly more to gain, but associating with another company whose market perception and/or consumers are noticeably below the level of your own is a big red flag.
Another thing to watch out for is the appearance of playing favorites. Too many collaborations with one brand can have consumers associate you together and you never want your perceived value to be tied too closely to that of someone else’s.
—Jess Levin, Carats & Cake
Make Sure You Are a Priority
When it comes to selecting potential partners, one of the most overlooked issues is prioritization. Make sure the company is vetting you as a partner as much as you are vetting them.
If this partnership is a top priority for the executive team, that is a good sign that they will commit the resources to make it work. Outside of this, you should also research the health, reputation and integrity of the company.
Check Out Their Core Values
It might sound cheesy, but if a potential partner doesn’t have core values defined or smirks when you want to review yours, don’t move forward. Would you want to date someone who doesn’t have an idea of where he or she is going—or worse, thinks your direction is silly and misaligned?
One of the best new client meetings we ever had was when we said, “Now, we want to talk about our 10 core values,” and the client said, “We have 10, too. And look, we have exactly four in common.” Shared values are a solid sign of a good relationship to come.
—Beck Bamberger, BAM Communications
Ensure ROI on Your Time
Collaborations often sound fun, but they can be incredibly time consuming with little reward at the end. I once set up a special referral program with a company that promised they would send many leads our way, only to see zero sales. We wasted a lot of time on our end setting up that partnership.
Collaborations are fun and can be a huge win for your business, but make sure that you can be very confident that the math will work out before you dive in. Look for a partner that is willing to be open with their numbers about similar partnerships in the past.
Make Sure They Have Experience
Do they have the experience and can they deliver on what they say? Low rates of repeat purchase, negative feedback online or difficulty getting their customers to take your calls are red flags.
Also, if a potential partner isn’t a culture fit, it’ll never work. That disparity doesn’t make them bad, but might be a sign your ways of working aren’t compatible.
—Chris Cancialosi, Gotham Culture
Image courtesy of Shutterstock
