NEW YORK (TheStreet) -- Small-business owners and entrepreneurs are passionate about expanding their companies. That passion often leads them to search for partners that can increase the value of the business or accelerate its growth.
Partnerships can bring value to customers and boost stock prices, but inappropriate or failed efforts can sap momentum from a new business. Some partnerships create great results but ultimately unravel, such as
venture with Pixar Animation Studios, formerly led by
founder Steve Jobs. Disney bought Pixar in 2006 in a deal that made Jobs the entertainment company's largest shareholder.
If you're considering teaming with another company or entrepreneur, here's how to improve your odds of success:
Do your due diligence
: Nothing is more important. This is where it all starts. When a service or company seems like a good fit, review its history, interview current partners and former employees, and meet leaders in person before you commit. Just as the greatest savings in product development are found in the design stages, the greatest time savings and success potential are found while getting to know the prospective partner.
Make sure you're compatible
: Whether we're talking technology, data or intelligence, examine the workflow in detail.
Find out if your cultures mesh
: It all starts with the people. I've found that the best partnerships are formed between like companies, with people and motivations that are similar. As the man said, "It's better to form a friendship from business, than it is to form a business from friendship."
Compare your goals
: To forge a long-term relationship of value, it's crucial for both parties to have similar goals for growth, marketing, sales and customer retention. A successful venture depends on this characteristic as much as any other.
Set specific returns for both parties
: Identifying specific rewards for each partner will help measure the effectiveness of the partnership, and reduce the chance of surprise or disappointment after the partnership is created.
Identify the effort's benefits and requirements
: I can't stress enough the need for the entrepreneur to ask: "Am I prepared to work hard to make this partnership work?" Being a good partner is hard work. While tending to your firm's daily operations, you must recognize opportunities you could share and try to exceed the parties' expectations. The partner can seem like another top-line customer, with often indirect revenue or value streams.
Partnerships can be very valuable to a young business. But the wrong partner or situation can impede growth. Following these steps can save time and help ensure success.