Business Model: Key partners

The next piece of the Canvas that we will focus on are Key Partners.

These partnership are critical for you to implement your Key Activities, contribute to your Value Proposition and to your Customer Segment.

In this chapter, we will look at different types of partnerships. I hope that this information will motivate you to form partnerships.

There are two important factors that you would need to keep in mind when doing so:

Value: it is important that the partnership adds value to your company. Before entering into a partnership, review your Value Proposition and make sure the Partner will be able to contribute to it. There needs to be benefits for both parties. If it turns out that the partnership does not take off (which happens sometimes), do not hesitate to terminate it.

Partnership agreement: it is critical that you have a clear partnership agreement in place whether you are working with a company or individual. Make sure that the expectations of the partnership is clear on both sides to avoid confusions or even conflict later on.

Different partnerships

There are different types of partnership that could be useful to your business, such as:

Buyer-Supplier partnership: This is the most common form and it could help you to have a reliable and systematic source of supplies for your business.

Co-opetition: Partnering with another company producing the same thing to gain more market share, reduce risks and create synergies.

Strategic Alliance: this kind of partnership is formed between non-competitors.

Joint Venture: Partnering with a complementary company to produce a new product.

In the initial stage of your company you may not need more than a simple partnership with a reliable supplier. Let me give you an example:

Let’s assume that you have a small bed and breakfast (B&B). You have already made a list of your key resources. You already know what products you need to run this place successfully, such as bed sheets, towels, cleaning products, breakfast food etc.

From your experience running the B&B, you need to refill the cleaning products once a week. Instead of going to a supermarket and buy these cleaning products every week, you can make an agreement with a wholesaler. Not only would you cut the price by going to a wholesaler (instead of the retailer) but you might also be successful in negotiating a good discount for being a loyal customer. Remember, the wholesaler also benefit from this deal.

Similarly, based on past customer demand, you know that you need to serve eggs for breakfast. Instead of going to the market every morning, you could make a deal with the local farmer so that s/he delivers the eggs directly to you every morning. In this case, the farmer could be another partner of yours.

Take away: Now write down in your canvas your current partners and make a separate list for potential partnerships to be explored.

Esther’s partners

As I started preparing jam, juice, wine and desserts, I have noticed that I needed a large amount of sugar and spices, jars, lids and packages (I call all these items raw products).

Buying these raw products in the market was so expensive and I had to walk frequently which took away time from doing my business. So I visited the sugar factories in the country and checked their websites to find wholesalers in the country. With this way I talked to couple of wholesalers and made agreements with them. I started getting the raw products I needed much cheaper, and delivered to my business. I no longer had to be concerned about running out of them as I had official agreement with the sugar factory.

Take away: Now make list of the companies you can partner with for each of the partnership type.