3 Steps to Consider When Establishing a New Business Partner
Do you want to establish new partnerships and accelerate your global market entry for your tech startup? My experiences have shown me that there’s practical steps you can take to decide who will be the best business partner for your technology or biotechnology startup.
An example taken from experience
A potential client went ahead and selected a partner in China. This was because they had received many requests from China based distributors. This company had simply picked the distributor they believed was the best.
All sounds perfect, I congratulated my clients. I had never heard of the company they had selected. I searched the company online and realized that a lot of information the company has on the webpage is quite misleading.
I also double checked with trusted resources who know the company well and confirmed that the company only has so far limited experience on handling projects as regional dealers though suppliers regional office or sole distributor, never had any experience working as national distributor and deal with the foreign suppliers directly.
Never miss crucial details from a contract...
This reminds me of another case where a client signed a 5-year exclusive contract with an agent in Asia.
Their contract was without any specified termination clause such as minimum performance targets. They ended up dealing with the partner for the whole contract period with very minimum business success. The business opportunity they missed is massive and the damage to business profits have been done.
3. Do a proper due diligence
Don’t complain about anything if you’re not willing to get your homework done. Cost may prohibit a 3rd party service. Even if this is the case, there are actionable steps you can take.
One of the things I would always recommend doing is a reference check, asking the company you plan to collaborate with to provide you a list of reference customers they work with. Check with them directly if they’re really happy working with your potential partner.
4. Sign the contract using a sophisticated template
Even if you failed the above-mentioned step number 1, a good contract can still help you a lot either to improve the partnership or walk away from it without hurting too much.
From my point of view, a good contract should like this:
- Fair to both parties
- Clear definition of the rights and obligations
- Quantitative objects
- Well defined measures to deal with situations when the partnership goes well or not well, for example contract extension or termination
If you're a life science startup or biotech startup and haven’t got a good template for your potential partners yet, feel free to follow us or send a comment to this post, we will provide you with a decent contract template which is verified by legal and business experts.
3. Manage the newly established relationship properly, especially for the first 6-12 months
Like any relationship, a partnership also needs good management and maintenance day to day. Here are some tips to maintain a positive relationship.
- Establish monthly meetings and reporting system: that you have a routine to talk to each other, review business progress, providing business updates from both sides and exchange your ideas
- Establish working groups to involve the key functionalities from both parties to ensure timely communication and react fast when there’s a problem, this is very important especially during the business launching phase. Something special about Asia nowadays is that a social media working group is always preferred compared to using the email as many people are working more often with their phone instead of computer.
- Ensure mutual respect between the business partners: A successful business partnership can only be based on a trustful relationship. Be willing to listen, to learn and respect the local market difference in culture, working style, business system and how business is done.
Be sure to implement these steps to establish meaningful and productive business partnerships. This is ultimately what will make your business global. If you’re looking to make your business global and would like support - whatever stage you might be at - then get in touch.