There are many basic data points you can use to assess your business deals quickly to gauge their success. During the partnership development process make sure to include language in the agreement that specifically addresses shared reporting on all activities of the deal so that you’ll have what you need to validate the partnership with
There are many basic data points you can use to assess your business deals quickly to gauge their success. During the partnership development process make sure to include language in the agreement that specifically addresses shared reporting on all activities of the deal so that you’ll have what you need to validate the partnership with numbers. The end goal in capturing the following pieces of information is to determine the ROI of the partnership deal. This is the most critical and final detail every business owner needs to understand about their business partnerships. By understanding what relationships deliver and which are failing will allow you to have a better idea of where to allocate resources in future quarters and years.
It is crucial that you have a clear understanding of the costs of each business partnership that you’ve created. The costs are not always easy to clearly define. So make sure that you include not only typical business expenses but also the time employees put into the entire process of initiating and maintaining the partnership to ensure its good standing. Include legal costs, marketing funds, executive management time, travel expenses and anything else that is part of closing a deal with a business partner.
Depending on the nature of the partnership and your company’s specific role in the deal, accounting for the revenue may be very straightforward or complex depending on the nature of the partnership. If you’re white labeling the product to a partner and selling it to them at a set price then you are easily able to project the numbers for each week, month, quarter, and year. However; if the partnership is based off a revenue share that varies according to which goods and services are sold then you will need to spend additional focus on checking and rechecking the total revenue earned based on the process identified in your partner agreement.
All small business owners that enter business to business partnerships are seeking to grow revenues. But there may also be several benefits that are not as clear but of no less value to the company for example, gaining access to customers, exposing the brand to a market in a new powerful way and getting introductions to other important decision makers in the industry. All of which provide growth opportunities for the company that would not exist without the existence of the partnership. Other benefits might even include the labor of specific skilled employees from a partner for specific tasks related to the agreement thus saving significant resources that otherwise would have been spent by your company. All of these additional benefits need to be valued in some manner so a business owner can look at the true cost / benefit ration of the partnership and determine if it is successful or under-performing.
Keep track of the data points that are important for calculating the true costs of each business partnership that you enter into. This will make sure that when it is time to evaluate which deals are successful and which ones are lacking, you can make your conclusions based on the numbers not on assumptions.
Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.
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