There are a variety of fundamental data points that you can utilize to evaluate the business agreements quickly and evaluate their effectiveness. When you are developing a partnership, be sure to include language in the agreement that provides shared reporting for the entire deal to provide you with the data you need to verify the partnership using numbers. The ultimate goal of collecting the information below is to calculate the return on investment of the partnership. The most crucial and most important aspect each business owner must be aware of when it comes to their business partnerships. Knowing what kind of relationships work and what ones are not, will give you a an understanding of where to put your resources in the coming quarters and over the course of years.
Resources Spent
It is essential to be aware of the expenses associated with each business partnership you’ve made. It isn’t always straightforward to define. Therefore, make sure you include not only the typical costs of business, but additionally the amount of time that employees invest in the process of starting and maintaining the partnership in order to maintain that it is in good standing. Include legal expenses as well as marketing funds as well as executive management time. travel expenses , and any other expense that comes with the process of negotiating the deal with the business partner.
Revenues earned
Based on the specifics of your partnership as well as the specific roles of your company in the partnership, accounting for the income could be straightforward or difficult dependent on the specifics of the partnership. If you’re white-labeling the product to a partner and then selling the product to them at the same price, you can easily estimate the revenue for every week, month, quarter and even the entire year. However, if your partnership is based on an income share that fluctuates in accordance with the manner in which goods and services are offered, then you’ll need to put more time making sure you are rechecking and checking the amount of revenue that is earned , based on the procedure stipulated in your partnership agreement.
Intangible Benefits
Small business owners who join business-to-business partnerships are looking to increase profits. But there could be some benefits that aren’t so obvious but have not less importance to the business, for instance the ability to connect with customers and exposing the brand to the market in a fresh and powerful manner and also gaining connections to other significant decision makers within the business. These all provide potential growth opportunities for your business which would not be possible without the the partnership. There are other benefits that could be the use of certain competent employees from partners for certain jobs that are a part of the agreement , thereby saving substantial funds that would otherwise have been used by your company. These additional benefits should be weighed in some way so that an owner of a business is able to evaluate the actual value / cost ratio of the partnership to determine whether it’s performing well or ineffective.
Make a note of the data points you believe can be used to calculate the true cost of each business partnership you enter into. This will ensure that when the time comes to determine which deals have been effective and which ones aren’t, you are able to draw conclusions based on the facts and not on a base of assumptions.
Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He shows how to reap the benefits through Joint Venture relationships by creating profit centers that have minimal risk and maximum profit.