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Written for EO by Michael Kiel, a serial entrepreneur.
Startups often focus most of their attention on securing funding from potential investors. That’s not a bad strategy—particularly considering how much money it takes to get a business off the ground. However, there might be another strategic partnership that can benefit small businesses seeking exposure: partnering with bigger brands.
Yes, bigger brands might be your competition. They could even target the same customers as your company, but they can still be potential allies. In fact, bigger brands may need your company as much as you need theirs. Smaller businesses are often more nimble than the giants of the business world, for instance, which allows them to react quickly to changes in market trends. They also tend to have a pulse on the needs of their customers—especially in more niche markets.
When HubSpot first launched its partner program, I was intrigued. It felt like a risky move, but my previous company decided to pursue a partnership with the marketing powerhouse. Considering we were also a marketing agency, the risk involved our choice to pivot our services to complement HubSpot’s platform. Combined with our pivot, this partnership increased our inbound leads and helped our revenue jump by more than 100% in a year. We were also able to generate predictable recurring revenue by referring current and prospective clients to HubSpot’s platform.
In other words, partnering with a big brand can help your startup grow in ways that aren’t possible on your own. This doesn’t mean you should enter into any partnership lightly, though. Partnerships must make sense for both organizations involved, and there are several ways to evaluate these potential relationships:
Conduct a values appraisal.
Entering into a partnership can appear to be an endorsement of the other party’s values. Ensure you and any potential partners align in this regard before you make anything final. Your venture will forever be associated with your partner, and it will affect business going forward—either positively or negatively.
The female social network findSisterhood understood this when partnering with Reebok. Within weeks of Reebok’s #BeMoreHuman campaign, findSisterhood launched its new app. Because both brands are passionate about empowering women and showcasing female strengths, the partnership worked out well for both parties.
Weigh risk versus the reward.
Most partnerships involve significant time or monetary commitments. For example, you may need to develop new products or services that complement your partner’s offerings. View this aspect of your partnership as an opportunity to create new revenue streams for your business.
Ayesha Curry, an actress-turned-celebrity cook, in 2017 started developing meal kits by partnering with Blue Apron. Curry may have tapped into the meal-kit provider’s existing delivery service, but the partnership required her to commit a significant amount of time. That investment is significant, but both parties are likely to expand their reach and potentially increase revenue with time—which is a win-win.
Consider development opportunities.
Startups have limited time and resources to properly train employees. Some partnerships have the added bonus of professional development, which can be beneficial during times of growth. Every aspect of your operation needs to scale in tandem with your business—otherwise, you may fail to meet demand.
As with any business strategy, building a relationship with a big brand shouldn’t leave customers confused. The partnership must work on a number of levels: from values and goals to messaging and target audience. Anything else will just dilute your startup brand.
Entrepreneur’s Organization is a global network of over 13,000 business owners. Learn how EO New Jersey helps over 100 business owners grow.
Michael Kiel is a serial entrepreneur with a passion for boating and online marketing. He is the founder of the startup Boat Planet, an online marketplace for connecting boat owners with trusted marine professionals.
This post was originally published on the EO Global Octane Blog.