Why a partnership proposition wasn’t the right choice for my business

E-commerce expert Simon Horton shares why some partnership 'opportunities' can be more trouble than they're worth.

E-commerce expert Simon Horton shares why some partnership ‘opportunities’ can be more trouble than they’re worth.

My biggest mistake in business has been convincing myself that other people’s opportunities aren’t necessarily my opportunities, and not jumping at the chance to be a part of everything that came along.

When you’re first starting out it’s exciting to be noticed and treated like a proper business that people respect; it’s flattering even. I eagerly signed up to every partnership proposal and got involved with each opportunity that came my way, thinking that was a gateway to my own success.

Individuals with their own start-up business will approach me, proposing to use my e-commerce plugin as a key part of their own venture. Larger firms approach me wanting to partner with my business, which often means you spend time integrating your product with theirs so they will add you to their list.

The problem is that it takes time and effort to pursue each ‘opportunity’. Communicating back and forth to understand what is proposed inevitably uncovers whatever you provide isn’t quite the right fit and needs adapting to meet their needs. If it didn’t need extra work, they would have just used it off the shelf without getting in touch. Why else cut you in on their sweet spot if they didn’t have to?

As what you offer doesn’t meet their needs, they need you to provide them something first before they can commit themselves to becoming a paying client. Why else would they become a paying client if you can’t give them what they are after first to demonstrate that you want to win their business? A bit of a chicken-and-egg situation.

My mistake

My mistake was committing time to develop my product in a new direction under the guise that this pre-sales activity will lead to the partner becoming a longstanding client. I’d justify to myself that the time and cost I was spending would be offset by the future revenue generated from winning this client.

Guess what, it never has done! By choosing to try and win one client it took me away from my own roadmap which would have attracted a greater number of customers in the long run.

These other start-ups just sapped me of my time and resource and often there was  nothing to show for it. Either their own venture fizzled before they made a start, or those that did get to market often came to nothing after a year. Well, why wouldn’t they give up so easily, it hadn’t cost them much to get it off the ground because I’d been the one bearing the costs.

What about the bigger companies and their promises to give you access to thousands of their clients?

Here’s my experience: all those clients that can become your users (once you’ve spent time integrating with the partner’s offering) turn out to be a tiny percentage of their overall customer base. This is because their existing customer base is generally established using comparable solutions to those you’re offering. Their customers won’t easily migrate over to your product/service. Instead you end up winning some business from the partnering companies’ new customer acquisitions, rather than their existing customers.

Don’t be dazzled by the number of existing customers they have. Find out how many new customers they win each month and base your calculations on tapping into some of those. It can have merit, but make a realistic worst case calculation of the return you’ll get and base your decision on that.

What I learned

I’m not saying that you should become so sceptical that you never listen to a partnership proposition. If it’s of interest but there is a cost involved in making it happen, make sure the other party pays to cover this cost. If what they’re proposing is so great, then they’ll easily recoup this investment. If they don’t want to put their money in, why should you? They’ll try and justify that they shouldn’t need to pay because it will benefit all your other customers and help you win new business. Stay strong.

When you think about it, that’s what your own product roadmap is set out to do, so keep following your own steady course without getting distracted by other people’s opportunities.

Maybe you’ll be lucky and the ‘opportunity’ that comes your way will turn out to be genuine. But do you really want to rely on luck?

Simon Horton is the founder of ShopIntegrator, a hosted shopping cart e-commerce solution.

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