Expertise On Demand
14 Apr 2009, 11:59PM PT
6 Apr 2009, 12:00AM PT
Closed: 14 Apr 2009, 11:59PM PT
Earn up to $200 for Insights on this case.
Continuing from our earlier cases, American Express is sponsoring more conversations here in the Insight Community concerning how small businesses can handle the current economic environment. Contributions to our past discussions have made their way to American Express' OPEN Forum blog, and we're looking for further insights that will complement the topics on the economy section of the OPEN Forum blog.
For this case, we're looking for small business owners who have found that teaming up with other business has improved both organizations. If you've experienced this phenomenon, tell us how you developed the relationship. How did it evolve? Why do you think the match was successful? Did you actively search out another business to help out yours? If so, how did you go about doing so? What do you think are the most important criteria to evaluate before partnering with another operation?
Ideally, submissions will contain specific examples and personal experience. Any insight that is selected to be published on the American Express OpenForum blog will be awarded a payment. You may submit multiple insights, but make each submission a post that can stand alone.
Small Business Co-Dependence by Ben Hwang
Tuesday, April 7th, 2009 @ 7:52AM
With economic times being tough, every small business has their own focus. Unfortunately, to remain competitive against larger organizations, smaller businesses have to co-depend on each other to further existence. A real world look at things would tell you that a small business just doesn't have the budgets to focus on marketing, sales, engineering, and every other division that a larger business can operate. Thus, you have to find those that do the things you need to help further your own business potential.
With my own startup, our backgrounds were more technical than design. It wasn't the fact that we couldn't do the job, but more so that it wasn't our forte. So in this sense, we sought out other professionals that could help alleviate that end of our business and allow us to focus on what we knew best. After doing business with a few small businesses, we decided to go through our rolodex and find some of our past colleagues and see what they were up to these days.
We ended up finding a past colleague that we knew to have the experience and we could vouch for her quality of work. She happened to have gone on and was doing freelance work and we found some contact information and began rebuilding a relationship with her. So far, she has filled in a void that we couldn't have by ourselves and we hope to continue this business relationship in the future.
I personally believe that small businesses can actually operate very much like individual organizations (HR, R&D, Engineering, IT, etc) within a large organization. Having worked in a larger corporation (120,000 people worldwide), the budgets and internal money movement is no different than small businesses operating within their own realms and dividing and conquering the business field through alliances.
I personally believe that in the end, the quality of work and timeliness speaks for itself. You can "get along" with some people just great, but if the work isn't there then it effects your bottom line regardless of how much buddy-buddy they are. So if the workmanship or business ethic is there (depending on what genre of business you're seeking) then that is probably one of the foremost qualities I judge partnerships with when I actively seek them out.
Selling Products With Another Company's Database by James Durbin
Tuesday, April 7th, 2009 @ 8:54AM
We've all heard how difficult is it to work on your business when you're working in your business. That's the situation we found ourselves in last year, when we had new products we were ready to sell, but the content creation and fulfillment was taking so much time that marketing the product correctly was a real time crunch. We have two stores, Brandstorming and the Social Media Headhunter Cafe, that sell online training DVD's to small businesses and recruiters.
We started looking for partners who had a large presence in the spaces we looked to sell, and begin testing the waters on a partnership where our products would be sold to their customer lists. It's not as easy as it sounds. We had to come to terms with how to compensate the companies financially, determine who made branding and ID standards decisions, and most important, make sure they were invested in our success.
Compensation: We had to come up with a plan where the potential upside to the company was substantial enough they would agree to "lend" us their database and brand to sell our product. That meant understanding what real money was to them ($1,000 a month? $10,000? $100,000?)
Selection: We had to find companies whose audiences wanted our product and would be willing to buy from us. There are two factors in play here. First, there was audience. The audience had to have been used to purchasing products from the brand. If the audience is used to getting everything free, they will come to our store, but would only stay around long enough to see they'd have to plunk money down. This ruled out almost all social networking sites, where advice and training, good or bad, is always free. The second factor was Authority. The audience had to believe that we had the experience to help their business. If we were purchasing advertising space, we would get some authority simply by virtue of being an advertiser. As a partner, the burden was somewhat higher. Our ads, our landing pages, and our text all had to demonstrate that the company made a good choice partnering with us, and did so to help their customers, not just benefit financially.
Gut Feel: I've been doing this long enough to know that you have to like someone, and be able to work with them if you want to be successful. The transaction couldn't be about money, in the end. It had to be that your contact wanted you to succeed, and was willing to help. This is the most difficult factor, because it's based on assumptions of your character, and the willingness of someone else to put their internal reputation on the line.
Decision Making And Resources: How are you marketing? Email? Banner Ads? Conventions? Do you get to be involved in their marketing, or are you creating your own? And who makes the final decision? Do they have control over your brand? Co-branding and partnership leads to a lot of questions in terms of look and feel. We were fortunate to have a designer at our disposal, which meant we didn't use their corporate resources.
Results And Conclusion
Our efforts eventually led to two companies working with us directly to market our products using their email databases, and several other companies carrying out products in their online stores. This allowed us to focus on content creation and social media marketing, without adding advertising, print, or list costs upfront. We're too early in the process to know if we lost money by giving away a portion of our profits, or if we made money by not having to advertise upfront, but the relationships with the two companies have already yielded other business leads.
That qualifies as an early success.
Complementing Instead of Competing by Eric Priezkalns
Tuesday, April 14th, 2009 @ 8:43AM
Have you ever spoken to a potential customer who wanted a product or service your business could provide, but which falls outside its normal offering? Did you take the extra business, and also take a chance that the customer might be disappointed if your delivery was below your regular high standards? Or did you walk away, because you wanted to safeguard the reputation you had built up? Small businesses are faced with dilemmas like this all the time. There are always going to be some customers looking for something that sits just outside of your normal range. Saying yes or no to an extra sale may be a very tough choice. However, there is a third way - by working with other small businesses that complement your offerings instead of competing with them.
Conventional logic is that you should always take every extra sale. That approach is often best in the short run, and is especially safe in an economic downturn. However, I also know of small companies that went bust because they over-reached. Insufficient sales will kill a company, but so can unhappy customers that refuse to pay for sub-standard results, especially if the customer is much bigger and can afford to swap suppliers or pour time and money into a legal fight. Another approach is to focus more on the importance of repeat sales to the same customer, and to keep the range of sales narrow but of the highest quality. The downside with this approach is that potential new customers may have taken the trouble to find your business, but after making contact they get nothing in return because you do not have what they want. That opens the door for your competitors, who will sell what you do not, and also offer a range that overlaps with yours. That potential customer may never return. An alternative is to give that customer a positive impression, without over-promising, by directing them to a partner business with a complementary range of products and services better suited to their needs. That way the customer gets some return for having made contact with you, gets the quality and value they wanted, and has every reason to come back to you in future when you can provide them with exactly what they need. Your business partner gets an extra sale, and depending on the relationship, you could earn commission or at least benefit from the reciprocal pushing of new customers from them to you.
How do you find complementary businesses? I offer professional services, and I need to give advice on the products of other companies to do my job. That means regularly researching what is happening in the market. Some of the companies I research will pretend to offer professional services as an add-on to what they do they best. Others just stick to what they are best at. Whilst I will be a professional in the advice I give, I naturally favor those companies that are happy to split any project with my business, or at least do not try to compete with it. I spend more time doing research than would be the norm for most small businesses, but the same logic that I use can be applied in general. Put your marketing hat on, then turn it upside down and think like a customer. How does a customer find you? What competitors might they find instead? What are the similar and related businesses that they might want or find instead? If you are not sure of the answers, try asking some of your most trusted customers for advice. From that research, identify those companies that have a range that would appeal to the same target markets as you do, but where the overlaps in products and services are small or nil.
The best complementary relationships tend to be with companies that offer very different solutions - or parts of solutions - to those you do, but where the customer's problem is much the same. My customers are communications providers. The right solutions for them may involve new hardware, new software, changing the way their people work, or a combination of all three. Some of the software companies will sell hardware too, even though it is not their core business. Similarly, the hardware companies might find themselves making software-related promises they cannot keep. Either one might pretend to have skills with training or process change which they simply do not. When looking for partners, I ignored the companies that had a track record of trying to be all things to all people, and spoke with the directors of those businesses that preferred to work within a well-defined niche. To begin with, I just asked them to tell me more about what they offer, their experience, and how they work, so I could give better advice and better referrals when customers speak to me. Of course, I was happy to answer the same questions about my business. There are no guarantees, but you have to trust your instincts about people, and these conversations are a good way to get a feel about potential business partners without any risk other than that your time may be wasted. Even then, your time is not completely wasted, as you will not want to direct your customers to a company that you found to be unhelpful.
After performing the initial broad survey, you can then select those companies which have the best potential for complementary relationships. Make a point of asking your customers to mention referrals from you to the other suppliers they contact, and to tell those other suppliers about the customers you sent their way. It may not happen overnight, but try to pick up on patterns that would indicate the best potential partners. This might be positive feedback from customers about another supplier they have used, or it might be increasing demand for a particular specialist service. Bring up the subject of commissions with partners when the time is right. This might be straight away if there is the potential for a big one-off sale, or it may be better to wait until you have established a history of making referals. At the same time, keep an eye on your potential partners and be sensitive to changes that should cause you to rethink your relationship, such as them diversifying to become a direct competitor, or indications of decreasing quality in their work.
In my experience, business relationships tend to boil down to your relationships with the individuals who speak for their business. It will be easier to form relationships with businesses that employ people you have had dealings with in the past, so make the most of your contacts and encourage them to be open and honest about the potential for a partnership. Some business people will always look for the quick advantage - which may be at your expense - so be wary of making a great effort to help businesses run by people you are unsure of, unless there is also a measurable commitment to help yours. Be careful as a symbiotic relationship may always turn parasitic. Saying that, you have to trust some people and that means taking some risks. You can build up relationships through referrals, and try to reinforce that by having follow-up meetings with your counterparts in a prospective partner. It helps if you can socialize with them informally as well. Try to lever the mutual benefits of partnerships and place yourself at the heart of your business connections by being willing to introduce your partners to each other. In the final reckoning, be pragmatic. If you generate ten extra sales for your partner, and they generate one extra sale for you, it may seem like a poor return, but do not think in terms of what you gain versus what your partners gain. Think only in terms of whether your business is better off. If your customers are happier because of they found another good supplier, and that one extra sale is greater than the small investment in time and courtesy involved in pushing business to your partner, your complementary relationship will be worth it.
Partnerships are a love/hate thing. by Greg Ferro
Tuesday, April 14th, 2009 @ 12:35PM
In my experience, forming partnerships with other companies has been a love/hate relationship and not a lot of middle ground.
My profession is niche: designing and consulting with customers on high-value corporate computer networks. I have chosen not to sell product but to focus on purely professional services. This means that I have a simple business infrastructure, but no relationships on which to find new customers since I could not rely on vendors or wholesalers to introduce me.
Early on, I approached a number of companies whom I knew preferred to to sell product but were less keen on selling services and discussed partnerships where my skillset could help in designing and deploying a solution, thus improving their prospects with some customers. Accordingly, I offered to act as their employee or representative and to support their business goals while working for that customer.
Building these relationships took a lot of time. I needed to contact and establish trust at management level, then work with the sales team to establish opportunities, convince them I could offer something and assist in winning them. I had to put in a lot of work to create trust and demonstrate capabilities to the customer AND my partner. This meant researching and preparing designs, working with the sales team to show how to use services to add value and enhance our offering. Once the business was won, I then had two parties to keep happy, our shared customer and my ‘partner-customer’.
The frustrating part was that a lot of sales process was out of my hands, I had to rely on my partner to attack and win the opportunity. They could control the pricing, their customer approach and, in most cases, the invoicing.
My first partnership was a success, we won a major piece of business and successfully co-operated to deliver the solution to the customer. Partnership meant that we worked to accept what each business needed - I needed cash flow to keep my going, and they needed to invoice the hardware to improve their cash flow. The customer wanted to see everything working before they would want to pay. We worked it out.
We continued to work together and my partner were eventually able to allow me to work with the customer directly, knowing and trusting that I would support their business.
Later partnerships were not such a positive experience. Some partners assumed I was stupid for offering free work and just used me for their own gain. I learned that some partners would reach beyond their capabilities and thus waste my time by chasing business that they were never likely to win. I learned that some people would never trust an external partner, no matter how trustworthy they showed themselves, and no matter what you had achieved for them (and no matter what they say to your face). My business suffered in these cases, and caused me to doubt my strategy.
Not all of these negative experiences were a total loss. Some of the end customers actively sought me out at a later stage and I was able to engage them for paid work (sometimes with, and sometimes without, the original partners involvement). I guess this proves the old adage “even bad publicity is good publicity”.
Now its a few years later, and the partnerships that have endured are a key source of income and we have become symbiotic partners in working with our customer. We help each other to ensure that our businesses are successful. We may have lost some customers, and we have brought business to each other. Some partnerships have been lost, key people have moved, or their business model changed. Most importantly, some of those early customers from failed partnerships have become my customers.
So why the love/hate ? Because I love the outcome, my business is successful and has a solid income with a few new customers every year. But I hate the work, the uncertainty and emotional energy expended in getting the partnerships working. And when they fail, I feel it has all been for nothing.
Symbiosis can be a positive, but when your partner lets you down, you need to make sure you don’t go down with them. On the other hand, you can achieve things that aren’t possible alone. Its a love/hate thing.
Partnering for Strength by Joshua Howe
Tuesday, April 14th, 2009 @ 12:55PM
No man is an island, and neither is your business. Creating strong business partnerships can be a valuable way to share contacts, costs and customers. Partnerships can involve sharing training, locations, contacts, customers, suppliers and reputation. Depending on your business's needs and what it can offer depends on the type of relationship you build with other small businesses.
Who's your Partner
Evaluate before Committing
Partnerships can be excellent ways to build your business and develop networks of complementary and competitive businesses. Whether it's working together on a project, sharing customers and leads or leveraging buying power, partners are a necessary part of business. Setting out clear goals about what your business needs are, and what you hope to achieve by developing these relationships will help you evaluate potential partners, leading to happier ventures in the future for those that meet your needs and you theirs.
Photo Courtesy of cquarles
Using Creativity for a Positive Outlook while the Economy Frightens Me by Greg Ferro
Tuesday, April 14th, 2009 @ 2:49PM
An old golf motivational story goes something like this: one golfer steps up to the tee, looks at the water trap just before the green, lines up the shot and thinks - must not put the ball in the water trap. He takes the shot and, sure enough, the ball heads straight into the water. The second player steps up, lines up the shot and she says - put the ball onto the green. She takes the shot, and the ball lands on the green. The moral is - be careful what you aim for, that’s what you are going to hit.
We all hear about how bad the economy is. The news, the meetings, and the numbers on the reports show us that things are pretty grim. Discussions with suppliers and partners are beginning to focus on how to reduce the fall in numbers rather than growth. Some people are in meetings with HR to discuss coming rounds of layoffs and redundancies, and some of the people affected are friends, and they may have families that depend on their jobs.
Because the bad news about the economy is at the top of our minds, we need to be consider what that does to our outlook. Are we starting to think about the “water trap” ? Am I thinking about how to protect my job ? Are you worrying about how far the numbers can slide before it becomes ‘termination’ ?
It when this happens that you start saying ‘no’ to ideas that can make a difference. When the only thing in your mind is the “water trap”, then that is where you are going to go.
Here is suggestion to help you find some joy, that might let you focus on “the green”. Write a fairy tale. Find a bit of time, focus, start with ‘Once upon a time’ and then write the fairy tale that you would love to see happen to your company.
For me, as a Computer Consultant, the most exciting time is when new technology arrives that offers reduced costs and better control. And that is what my fairy tale is about.
Here is what I wrote:
Once upon a time, there was a Company that wasn’t doing so well. The Wicked Witch of Economy had cast an evil spell that made everyone unhappy. All the people in the Company Land didn’t like their work, and were angry with each other. They were sitting at home being unhappy, instead of getting outside to do things. They were so sad that didn’t go on holidays, or buy new furniture, or all the things that made them happy.
In particular, the Corporate Court of Information Technology was very unhappy. All the princes would have meetings to discuss the new projects, but, of course, there were no new projects, or at least, none that were exciting to the princes. And the princes were glum, and stopped riding across the land to look for things to do. They spent their time evaluating, and re-evaluating the projects that they were already working on. They reviewed their procedures, and overhauled their workflow, prepared architectural summaries and cleared the backlog of reports that they had always been meaning to do.
But the princes were still very glum. They just didn’t know what to do with themselves.
One night, there was strange feeling across the land. Something was different. The people all muttered to themselves that this was all they needed. As if things weren’t bad enough. Rumour had it that a Technology was roaming the Outlands, wild and untamed it was threatening the outlying businesses and farm.
The mutterings grew, and the populace were unsettled and the King decided to send the courtiers to investigate. And so the Business Analysts were dispatched to corners of the kingdom, to search for source of this new Technology. After days of searching, a lone Business Analyst returned with word. His eyes were full of wonder, his face full of light, the Technology was true. It contained promise, it had a future, it seemed to be right, and, most of all, the numbers added up.
The Princes were summoned to the Kings presence and commanded to armour up and head off to conquer this New Technology and to bring its head back to him to show that the battle had been won.
The people were mightily pleased to see the Princes ride out to do battle. It was a long time since a joyous site had been seen, the Princes were strong in their talents, and mighty in their learning. All the People roused a stirring cheer and went about their work with PURPOSE. The world was right again.
And though the Wicked Witch of the Economy was still there, her spell didn’t work on the Corporate Court of Information Technology. They had the New Technology to dispel the gloom.
Try it. And when things are looking bad, think of your fairy tale and make that happen instead of thinking about how bad it's going to be. Aim to be on the green, not avoiding the water trap.
A Partnering approch to provide Managed Services for Small Business by Ramkaran Rudravaram
Tuesday, April 14th, 2009 @ 6:27PM
The Perpective in this blog is a first hand account from working for a network service provider under going a transformation. We are moving from simple bandwidth and data center services provider to a complete managed services provider(for IT Infrastructure) by partnering with several hardware, software and tools providers.
Let me do jargon bursting for easier comprehension...
SaaS - Software as a Service - Providing a in-house/third party software in a shared Multi-tenanted (apartment leasing type) model with automatic upgrades and technology refreshes in a Pay as you go model.
Platform as a Service (PaaS) - Providing basic building blocks of IT like Servers, Storage and Networks along with some tools that enable hosting/running compatible applications on a pay as you go model.
Cloud computing - Similar to PaaS in a pay per use model with more generic/abstracted platform services.
What are Managed Services ?
Managed services in general is the practice of transferring day-to-day related management responsibility as a strategic method for improved effective and efficient operations. Managed Services for IT infrastructure allows enterprises to focus on the core competence and pass the responsibility of day to day IT management to the experts.
Why are Managed Services relavant to Small Business ?
We are living in trying times; the economic turmoil coupled with global competition and a deep awareness of climate change has a lasting impact on the business strategy for Small and Medium Business Owners.
Managed Services free up the business owner/management from day-to-day sustenance services to help him focus on strategic objectives and practical measures relevant to his/her core business.
There is a new social networking driven consciousness in corporations and individuals on the necessity to create innovative products/solutions, identify frugal manufacturing/execution options and safeguard this world for a better tomorrow
This consciousness is driving adoption managed services to create new technologies/processes for harnessing human knowledge, technology sustainability and economic viability of enterprises.
How do managed services help harness human knowledge Small and Medium Businesses?
Communication, Collaboration and Knowledge management are key components of an effective social network to harness tacit and explicit human knowledge. The Businesses of all sizes are realizing this value of social networks and are investing heavily into communication/collaboration infrastructure.
We intend to reduce the inherent complexity of operating Multi-Media communication infrastructure by driving the adoption Voice Services, Contact Centers, Messaging and Video Conferencing as Managed services or on a SaaS platform.
Our capability to deliver these services is largely due to symbiotic relationships with our partners who provide technology, tools and expertise to quickly ramp up the SaaS/PaaS platforms to serve the customer. We have challenged the conventional wisdom by collaborating with two competing 600 pound gorillas(google/gmail and Microsoft/Exchange) in the collaboration technology to serve different classes of customers.
How can managed services provider help Small and Medium Businesses in Technology Sustainability?
Managed Service Providers bring the technology innovation in Virtualization (on Storage, Network and Server fronts) to enabling new and unique business models for Remote Infrastructure Management for enterprises of all sizes.
Virtualization not only allows easy realization of compute on demand infrastructure but also creates compelling business case for outsourcing system builds and software deployments to Remote Managed Services providers.
There are new trends in Desktop virtualization that remind us of déjà-vu of mainframe days with data center based user computing environments.
This creates a clear opportunity for standardizing, simplifying and remote management of desktop infrastructure directly translates into faster ROI for these services.
There is a rapid convergence is happening in storage technology, the innovation in storage arrays (like Thin provisioning and de-duplication) and the advent 10 gb Loss less Ethernet along with support for emerging standards(FCoE) is reducing the cost and complexity in network storage.
This convergence is creating opportunities for Data Center providers like us to morph in to Managed service Providers by offering Storage on Demand both for within Data center use and for Remote replication/Business continuity.
Last but not the least, Original equipment providers are focusing on Green IT technologies by reducing their carbon foot print and measuring themselves on metrics like Performance Per Watt and power consumption ratios(Idle to full capacity).
It is easier for us(Managed Service providers) with our deep partnerships with technology providers like Cisco, EMC, HP and IBM to rapidly adopt the technology upgrades.
There may be a time when organization may stop buying Hardware, software or security appliances and instead opt for specific business functions as a service from managed service providers to realize the true benefits of sustainable green IT Infrastructure.
How do we improve Economic Viability for Small and Medium Business ?
It may be challenging to allocate and spend capital expenditure on IT assets for Small and Medium business in this economy. PaaS/cloud computing offerings from managed service providers make it easier for small businesses to consume IT assets in a pay as you go model.
Managed Service providers are able to leverage the economies of scale, relationship with technology providers and financial institutions to acquire the Building blocks for SaaS and PaaS services on revenue share/annuity model.
Small and Medium businesses can move from CapEx to OpEx model for IT investments to conserve cash and improve economic viability by subscribing to Managed services.
It makes sense to partnering with your Managed Service Provider...as an early adopter..
Typically SaaS and PaaS services are available for trials, beta testing and early adopter programs.
The Small and Medium Business can take advantage of early adopter programs, these are generally in the spirit of partnership. The providers have a deeper engagement during these engagements and may not charge for other wise billed professional services. The reward is significant enough to warrant the risk.
In a Nutshell, As the technology stacks become more complex and economic reality compels us to seek and nurture symbiotic relationships for long term success.
Partnering to profit by David Cassel
Tuesday, April 14th, 2009 @ 11:34PM
I remember working with a small and frantic transcribing service which was overloaded with clients.Soon they'd pooled their resources with my own transcribing service, and we both immediately discovered a surprising increase in our profits. Because twice as many typists were available for rush projects, the partnership let us guarantee clients a 24-hour turnaround time -- which we could bill at a higher rate! This speedy new ability helped us land a big account (which always paid us at the higher rate). But more importantly, our partnership helped us survive in a difficult economy. Even during "dry spells," there'd be crucial extra work coming in -- the overflow work from our partner!
It had started as an experiment, but it evolved into a long and enduring partnership -- because it made sense. And the internet made things easier, since the work itself (audio files) could be digitized and transmitted to the "back bench" of stay-at-home typists. It's surprisingly easy to establish partnerships online -- and some people have taken it to the next level. Timothy Ferris wrote a best-selling book called "The 4-Hour Work Week," arguing that it's possible to outsource the majority of time-consuming projects -- especially using the internet -- saving both time and money, and often producing better results!
In our case, the combination was obvious, since we'd known each other as competitors for several years. But this professional reputation was important, because both companies ultimately had to make a "leap of faith," assuming a certain competence which could only be verified after working together. To make things easier, it was understood that the partnership could be dissolved at any time. But after a few months, both parties realized that it was "working" -- our earnings were up, and our workload was more even.
It's a little like hotels which refer customers to "partner" hotels when they've sold out all their rooms. It's good for customers as well as the partners, since it's an efficient way to match needs to resources -- and to keep money from wandering off to competing non-partners!