By Ed McLaughlin and Wyn Lydecker

Imagine being a shoe shop owner. You have to rent your retail space, pay your employees, order and keep an abundant inventory, give yourself a salary so your kid can go to college, pay taxes, hopefully have enough cash to plow back into the business. When a customer comes in, you charge across the store, thrust your most expensive pair in his face, tell him your business woes and beg him to help you give your children a trip to Disney World.

Ridiculous, right? Yet fundamentally the same phenomenon is taking place almost daily on a different scale among small businesses looking to form strategic partnerships for business development. As Jason Cohen writes in Why Startup Biz Dev Deals Almost Never Get Done on the blog A Smart Bear, small startups too often focus on the big, complementary distribution partner as an enabler of their own ambitions. Unfortunately, what they’re offering usually amounts to an unsought pair of shoes and a high price for the distributor, rather than a gain the would-be partner is actually seeking. They have forgotten the rule of “What’s in it for me?” As Jason points out,  when persuading someone to help you, as client or partner, you have to approach with their advantage forefront in your mind – what’s in it for them. The way to get them to buy shoes (that is, spread word of your product through their network) is to offer them the durable shoes they want (that is, lasting customer relations that will continue to bear fruit in the future).

If the exposure you seek in a business development deal is one that will make a big difference to your fledgling company comes but only at a cost to the distributor, then the potential partner will turn you down.  After all, they are letting you trade on their name, and your name and reputation are everything.. Jason Cohen uses a case study with WordPress plugins (his stock in trade), where distribution of a promising plugin would realistically mean only a 1% increase in revenue for one month for the distributor. The creator of the plugin is rolling in orders and money, but to the distributor, it’s a very small drop in the bucket. If you can’t compete with the safety of not helping you in monetary terms, so what can you do? Set up a model that yields commitment from clients to the distributor. That’s the resource you can offer, even if it’s not the advantage you’re looking for when setting up the partnership.

The secret is no secret at all: your partner isn’t primarily concerned with your advantage; they care most about their own. You need money, but they operate on a different scale, so they need a different dimension of business. If you can offer that dimension, you are selling the right shoes to the right customer. If you can’t, you’re really just asking for money to take your kids to Epcot. Offer value to a partner that is particular to their needs, in order to meet your own.

Ed McLaughlin is currently co-writing the book “The Purpose Is Profit: The Truth about Starting and Building Your Own Business” with Wyn Lydecker and Paul McLaughlin.  


Copyright © 2014 by Ed McLaughlin All rights reserved.