Business Management - How to win work by partnering - part 2

Having identified prospective partners to help you widen your contract net, the next step is to agree the right structure that protects all parties involved and ensures financial benefits, Leslie Kossoff advises.

Joining forces can give you the competitive edge - image: iStockphoto
Joining forces can give you the competitive edge - image: iStockphoto

Now that you have made the decision to enhance your offering through alliances with other providers (HW, 22 April) and expand your selling and contracting into the public sector (or private, for that matter), you need to make sure that you have the right structure in place.

"Wait!" you're thinking (or you should be). "She just changed from 'partnering' to 'alliances.' What's she doing?"

The short answer is: giving you legal cover. Because when you put together any form of consortium to provide services - even though you have identified the services the other members need to provide, the quality criteria they use to measure performance and improvement and that the organisation's leaders are those whom you trust and with whom you can work - you still need to make sure that you have the right legal structure to protect your business and your customers from potential future liability.

Yes, your customers, too. It is very likely that as you come in with your beautifully designed offering, your customers - especially if they are public sector - are going to ask whether those other providers are part of your organisation. What they really want to know (although they will not ask directly) is whether there is any liability exposure they might have in the deal as a result of doing business with your organisation.

So you must have all your ducks in a row - for your own purposes as well as theirs - before you walk through that door.

The Structures

If you ask a solicitor, you will get far more choices than I am providing here. But to give you a framework from which to work - from the loosest to the most legally binding - the structures are:

- Associates.

- Strategic alliances.

- Partnerships.

We will take them one at a time.

Associates

In this case there is, technically, no binding relationship at all, although you will want to have a contract with the providers you choose. You build your pitch (HW, 18 March) around a set of other business resources you have, know and will enhance your opportunities to bid.

As those opportunities arise, you go to the applicable resources (all of whom you have put through the previously described questioning/analysis process) and create appropriate teams. You then present the customer with one solution that is made up of all the composite parts.

The contract is yours - under your company name - and you are responsible for the management, oversight and payment of everyone involved.

As far as remuneration goes, since as the legal contractor you are going to have additional operational, managerial and administrative expenses, you may want to either take a piece of the other participants' fees or add a premium onto the fee you present the customer. For micros and SMEs, a commonly used rule of thumb is 15 per cent - but it also depends on the customers' budgets and your colleagues' operating costs and margins.

Strategic alliances

Now we are getting a bit more closely tied together. You are definitely working with a specific contract and this structure creates limitations by design.

When you offer a provider the opportunity to become a "strategic ally," part of the deal is that they cannot provide their services to others who compete with you - particularly for the same contracts.

As a result, the proposition you put forward - particularly in the extent to which you will go for contracts to help build your respective businesses - has to have something very tangible in it for them in the immediate and longer term.

Strategic alliances have a shared goal, outcome and consequences. Technically, the other businesses involved may be considered suppliers to you but, internal to your relationship, there is a shared commitment and greater share in remuneration.

Partnerships

The term "partnership" is tossed around as though it is just a friendly relationship. It's not. Partnerships are serious. They are legally bound relationships that create one single entity out of previously separate entities.

In discussing establishing a partnership with another business owner, you may use the term loosely in the early stages while you look at different legal structures. However, the most important thing is to get legal and accounting advice early regarding the pros and cons to determine how to create the entity that will best serve you all.

Progression and outcome

The outcome you are working toward - no matter what the structure - is your ability to present a cohesive, value-added offering. Your customer does not care what the specific relationship is as long as its invisible to them, under your management and ensures that they have no liability exposure.

You may want to try out an associate-based relationship with a variety of providers before you start developing a strategic alliance let alone a partnership to make sure you get your team just right. Then you can decide whether you want to escalate the relationship toward a more legally-bound structure.

The main thing is that by developing these structures, you are expanding your own and your organisation's opportunities and horizons. You are doing the same for your collaborators, too, using a strategy designed for immediate and future success. There will be no shortage of takers wanting in.

So, be clear about what you want and with whom you want to work. The choices are all yours.

Leslie L Kossoff is the author of Leadership Quantified - see www.leadershipquantified.com


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