Guide to Partnering with Another Small Business

Choose a partner with similar interests

An architect teams up with an interior designer and together they generate more and better leads for new projects. Other typical complementary relationships include real estate agents and banks or mortgage brokers; business brokers and valuation companies; apparel and footwear companies who cater to the same customers.

I recommend: Join a networking group to find potential partners. Try Business Networking International, your local Chamber of Commerce, or the Young Presidents Organization. Online, try Ryze or LinkedIn.

Know what you want to get from the partnership

You can create a joint venture or alliance for any number of reasons: to cross-promote your products; to develop new technology together; to share costs; or for a distribution partner to resell a manufacturer’s products. While some good partnerships occur from an “aha” moment that occurs on the fly, it’s worthwhile to set goals before kicking off an alliance.

I recommend: Take The Partnership Quiz to clarify your strengths, weaknesses, and goals for a partnership. Read JVWeb’s joint venture checklist. Check out MarketingProfs “5 Rules for Marketing Partnerships” (registration required).

Get it in writing

While very small businesses often handle partnerships informally, if you’re partnering with a business that’s bigger than yours, sign a partnership, joint venture or strategic alliance agreement that clearly spells out expectations.

I recommend: AllBusiness.com offers a variety of legal contracts for as little as $25, such as this 50-50 joint venture contract. Download forms and free legal contracts, including a teaming agreement and a confidentiality agreement, from Xdrive, a file-sharing service owned by AOL (registration required).

Watch out for common obstacles

While partnerships offer tremendous rewards, they can be risky. Becoming aware of potential obstacles can help you avoid them.

I recommend: Watch this Stanford University webcast about partnering with a potential competitor. If you’re already experiencing troubles in an existing partnership, take this quiz from U.K. solutions provider Socia, which will give you feedback about how to solve partnering problems.