How to create a successful business partnership

BRENDA BOUW Special to The Globe and Mail Published Wednesday, Jul. 22, 2015 5:00AM EDT Last updated Wednesday, Jul. 22, 2015 2:10PM EDTFor the past six years, Vancouver Foodie Tours owner Michelle Ng has been taking hungry tourists to some of the city’s best places to chow down.Mouth-watering meals can often sell themselves, but Ms. Ng recently started looking for a new way to package and sell her business to a broader range of visitors.Borrowing a page from past tourism partnerships in Vancouver and other cities around the world, Ms. Ng formed the Experience Vancouver Group, an alliance of tour businesses in the city. They include her food-focused company, as well as Forbidden Vancouver, Vancouver Photowalks, Cycle City Tours and Vancouver Water Adventures. The five companies share a marketing budget (but not revenues) and refer their individual customers to other businesses in the group.“It’s a great place for us to learn from each other, to provide support and to share connections,” she says.Ms. Ng reached out to the four other businesses based on their high-ranking status on TripAdvisor and because they were considered complimentary and not in competition with one another. Each one also fit another important criteria of being in business for at least three years.“In order for me to refer business to another company, I need to be confident they are doing well and will be around,” Ms. Ng says.Business alliances aren’t new, but are becoming an attractive option for a growing number of companies – big and small – looking to strengthen and scale their brands.Well-known partnerships include the one Starbucks has with Barnes and Nobles bookstores in the U.S. and Indigo in Canada, the Star Alliance global airline partnership (including companies such as Air Canada, United Airlines and Air New Zealand), and the technology alliance between Hewlett-Packard and The Walt Disney Co.There are both operational and marketing benefits to business partnerships, says Mark Wardell, founder and president of Vancouver-based Wardell International, which helps companies develop alliances across a range of industries such as technology and food services.“If you combine your services in some way you can get access to larger markets you may not have had access to in the first place,” said Wardell.He says smaller companies often do this when bidding for contracts through an RFP (request for proposal), by combining their different skills.There’s also a “credibility boost” when companies combine, especially for the smaller brand.“It’s not likely to drag down the stronger brand, but is likely to create gains for the lesser-known one,” Mr. Wardell says.Companies that come together can also save money on marketing costs and share business risk when entering into a new market or promoting a new product.But companies also have to be careful which business they partner with.“The wrong partner can damage your reputation,” says Mr. Wardell. “Even if you market yourself as a collective, the customer’s perception is that you’re one unit. If they have a bad experience with your partner, that will reflect badly on you.”He advises each business to do its due diligence on potential partners and find ones that are a good fit both in brand and vision. Both sides should also gain from the collaboration.“Even if one brand is stronger than the other, there has to be an obvious mutual benefit to the relationship. If one party is benefiting more than the other, then the alliance dies,” says Mr. Wardell. “You need to focus on your partner’s needs. It’s not unlike in a marriage.”Business alliances don’t need to be with companies of similar size. When small and large companies pair up, the smaller ones benefit from the bigger network. However, large companies can gain advantage from emerging products or technologies being developed by smaller companies, which they may not have a mandate to deliver.“For a bigger company, the advantage is working with a [smaller company’s] leading-edge technology from the ground floor. They can also be part of the process earlier in the development stage, to advise how the product will solve an industry problem,” says Irene Sterian, executive director at the Refined Manufacturing Acceleration Process (ReMAP), a government and industry funded non-profit alliance of companies centred around electronics manufacturing in Canada.ReMAP, formed a year ago, is led by Toronto-based Celestica Inc. and includes small, medium and large organizations behind 15 projects in sectors such as aerospace, health care and renewable energy.“Part of my job is matchmaker,” says Ms. Sterian. “It’s to look for small companies in Canada that have a problem that we think we can solve internally and put them with partners that can help them.”An example is 7D Surgical, which is working with Celestica, as well as Toronto’s Sunnybrook Hospital and Ryerson University, on 3-D technology that helps surgeons see better inside their patients during an operation, such as spinal surgery. It gives the doctors a more accurate look at underlying tissue, allowing them to insert screws into the spine more quickly and accurately.Another project is with Celestica, the University of Waterloo and S2E Technologies Inc., which makes lamination materials to boost the power conversion in solar systems.Ms. Sterian says the benefit of the ReMap network is to keep the technology and partnerships in Canada, to help build and benefit the industry and create jobs within the country.“It’s small group of people that is focused on one thing and doing it together,” says Ms. Sterian. “Even though we’re small, we’re thinking big.”