What Makes a Partnership Become a Legend?
What makes a partnership become a legend? As with an individual legend, you must capture the emotions of your prospective audience. When you reach them at the emotional level you have a good chance of becoming a legend. The dance partnership of Fred Astaire and Ginger Rogers is a good example.
In his Letter to the NY Times Editor, http://www.nytimes.com/2009/08/23/arts/23alsmail-ASTAIREANDRO_LETTERS.html, Steven R. Pisani says, in response to an article about Astaire and Rogers, “Although Astaire had many dance partners, only Rogers was able to transform the partnership from pure entertainment to romance”. It was a partnership where each could bring their true talents and emotion to their work. Romance was their brand.
Your partnership can have just as strong a brand. The secret is finding the strengths of each partner and merging them together into a clear message that will reach the emotions of the buyer/prospect. Make no mistake, this applies to your partnership regardless of whether you’re a gas station and car repair or accounting and financial services.
It’s worth brainstorming with your partner or potential partner to find the emotional element that could make a difference in your partnership’s success and long term viability. Who knows? You might even become legendary.
Legal Perspective on Strategic Alliances
In the article “The Strategic Alliance”, http://www.ivanhoffman.com/strategic.html, by Ivan Hoffman, B.A., J.D., he indicates there is no legal relationship called a “strategic alliance”. In forming such it’s up to the parties to define the legalities of their relationship by contract. The terms of the agreement must cover the specifics of the respective rights and obligations of the partners within that relationship.
Ivan’s list of provisions that must be spelled out in order to give “strategic alliance” a legal meaning include the following:
1 – The nature of the relationship. Is it a partnership or joint venture, but for limited purpose. He sets out the details in depth in his article, http://www.ivanhoffman.com/strategic.html.
2 – The term of the relationship.
3 – Participation rights. Who’s entitled to what and when.
Obviously if you’re considering a strategic alliance it definitely must be delineated in writing and agreed to by all parties. And get the advice of your legal counsel regarding your specific situation.
Intangible Assets: An Entrepreneur’s Guide
When you hear the term intangible assets, do you think of goodwill, copyrights, patents or trademarks? You aren’t wrong, of course, but the term in today’s information-based economy has taken on a much broader meaning.
We’re all familiar with the tangible assets of our business: real estate, equipment, inventory, cash. These each have a dollar value on our books and are accounted for on our balance sheet. This doesn’t, however, account for all we own or have access to that is of value.
If yours is a service business a very high percentage of its value is likely to be in the form of intangible assets. Intangibles are given an arbitrary value at the time of ownership transfer, requests for capital and valuation for other purposes. So it’s important that we know what they are and seek ways to influence their development.
In layman’s terms, let’s look at some of these valuable abstract elements and see how we might make the most of them.
Network
In the course of creating and building a business you’ve developed a network. That network is what supports the dynamics of your business. It’s the nature and speed of information flow within this network that keeps your business alive. Customers, suppliers, alliances, advisers, resources and the people within your organization make up this network. These are the people through whom you get the job done and upon whom your success is dependent. Consider this network the framework (or web) that is the basis of your business value. Nurture your network and seek ways to continue its growth.
Customers
Some say our customers are our most valuable asset. Why is that? First of all, they’re the ones who keep us in business. Without them, we’d be dust. They also provide our potential for profit. How well do we know the overall picture of their business and its needs? The better we know our customers, the better we can focus where our efforts should be. Customers also can be the very best references if they’re satisfied with our services.
Look for more ways to create a win-win situation between you and your customer. Use each other as resources and profit streams whenever possible. It’s very difficult to put a dollar value on your customers. Just look for ways to increase their profitability. A solid goal for this year would be to increase the profit margin for each customer as much as reasonably possible. There’s a lot that can done here and is too much for this article, so contact me if you’re looking for some ideas.
Suppliers
Suppliers also keep you in business. They can make you look good or look bad. Choose them not only for price but for dependability and good service. Knowing you’re covered by your suppliers gives you a lot more time to spend on more important business matters. A dependable supplier who is open to your needs is a great asset. Review your suppliers and see which ones might need some attention. Create a set of criteria that you can use as a checklist when considering new suppliers.
Strategic Alliances
You can create strategic alliances with anybody: your customers, your suppliers, tangential businesses. The value of such alliances is the market extension it provides. By creating win-win scenarios with other businesses, your market reach has been expanded. You can even create strategic alliances with employees. If you’re looking to keep valued staff, set up a strategic alliance with them that acknowledges their value. The same is true for independent contractors. You may also want to outsource a whole division (Marketing, Public Relations, Accounting) and establish a mutually beneficial alliance. Assess where your business might be able to benefit from a new or a replacement alliance. You can put a value on each strategic alliance by determining the profit that it produces.
Business Goodwill
The term “business goodwill” is largely a function of the image your business has created in the marketplace. Whether a single entrepreneur or a company of hundreds your reputation has value. It is based on the trust, respect and expectations your business activities have created. Your policies and your people are the drivers of this value. The more valuable your goodwill, the more it will be seen as a beacon in the marketplace. How would you value your goodwill? If you’re not happy with your finding, this is definitely an area for some attention. Survey your network to assess your goodwill value, seek suggestions for improvement, make necessary changes and adjustments and reassess at the end of next year.
Intellectual Properties
If any of your business activities are unique enough to have a patent, trademark or copyright, your business has extra value. If you can license use of these intellectual properties to someone else, you’ve extended that value. Not all businesses have intellectual properties, but it’s worth a serious examination of any process, model, document or activity that you think might possibly qualify. Maybe a minor addition or adjustment would establish enough difference to make it qualify.
Intellectual properties that can’t be legally protected, are called “Trade Secrets” and require special management. If this applies to your business, determine the type of security system needed; test it, review it frequently and update when necessary.
Proprietary Products
If you have patented, trademarked or copyrighted products hopefully you’re seeing their value in the revenue they are generating. If you have more than one, which are your market leaders – and why? If some are non-performing, consider retiring them or at least revamping them if they’re deemed salvagable. In assessing your market consider changes observed and how this effects the demand for your products or services. Spend product development dollars to upgrade existing products or create new ones to fill market need.
Knowledge
Knowledge management is the term used to describe how an organization identifies, organizes and distributes its complex structure of information (data) and human knowledge (memories, thoughts and ideas) and translates it into business intelligence. I think business intelligence is a correct term because the goal is for each member of the organization to have appropriate access to information and knowledge that will allow him to function at the most intelligent level. The greater the business intelligence level of each team member, the better knowledge is being managed.
This is certainly one of the more nebulous and complex concepts to not only place value on, but even to completely identify and integrate. Nonetheless, it’s worth our time to obtain a personal asset assessment for each team member, to place an incentive on the sharing of ideas, resources and information and to acknowledge all value received. To the extent that agreement or consensus can be reached on any given subject, strength is added to the value.
Intellectual Capital
When you “capitalize” or measure the impact that your intellectual properties and your knowledge management (or business intelligence) efforts have made, you create Intellectual Capital. According to Saul Carliner, Ph.D., Consultant, Fredrickson Communications, Inc., in his article, Intellectual Capital: Putting Tangible Value on Training and Documentation, “there are three types of intellectual capital: human capital, structural capital and customer capital. Human capital is all of the brainpower that leaves at 5 p.m. (employees). Structural capital is all that brainpower that stays after 5 p.m. such as policies and procedures, customized software applications, training courses, patents and the like. Customer capital (also called relationship capital) is the relationships with customers and prospects.” I think you get the idea. Good intellectual property and knowledge management results in high intellectual capital.
Well, there you have it – a plain English guide to identifying and working your Intangible Assets. Hopefully, you also have a new appreciation for the role they play in creating business value. Whenever possible, establish a dollar (or other measure) value for each one so you can monitor changes over time. The most important thing, of course, is to use the knowledge you’ve gained in the process.