## How to develop Strategic Partnerships that work

Most strategic partnerships fail. The often publicly stated reason is that there was some “inequity in resources.” That is rubbish. **The private reason is that the potential partners did not have clear role definitions. **

**Great coaches should be able to help you develop successful strategic partnerships**. Sadly, too few coaches have enough expertise to explain the following.

**I invite you to adapt and forward this post. This formula works.**

Let’s imagine that two consultants agree to partner on a consulting project. They each have something mutually beneficial to contribute. And the net result will exceed whatever they could provide individually. **In short, they need one another.** **They need a formula to define clear role definitions.**

**Typically there are 3 phases in any consulting project: sales, technology/unique solution, and delivery.** (Adapt this formula as you see fit for any project or partnership, but try to keep it simple.) Assume that each phase is worth 1/3 of the total value to the consulting project. If the project is worth $90,000 then the sale is worth 1/3 or $30,000, the technology is worth 1/3 or $30,000, and the delivery is worth 1/3 or $30,000.

Example #1: Assume that Matt brings expertise in sales and delivery. Assume that Doug brings expertise in technology and delivery.

**So they agree to the following formula:**

Matt provides 80% the sale of $30,000 for a total of $24,000. Matt does not provide any direct value for the technology. Matt provides 50% of $30,000 or $15,000 for the delivery. Matt’s total compensation for the consulting project will be $39,000.

Doug provides 20% of the sale of $30,000 for a total of $6,000. Doug provides 100% of the technology for a total of $30,000. Doug provides 50% of $30,000 or $15,000 for the delivery. Doug’s total compensation for the consulting project will be $51,000.

**This formula assumes that each consultant will mutually benefit one another and their client. **

**Your partnership agreements should also assume that they are beneficial to all parties.**

Last week I received a proposal to partner in a new venture. I used this formula in the following manner:

Example #2: Tom brings expertise in sales. Sue brings expertise in delivery. Doug brings expertise in technology.

**After due diligence and some realistic fact finding, I proposed the following formula for $300,000 gross revenue in year 1.**

Tom provides 80% of the sale of $100,000 for a total of $80,000. Tom provides 10% of the technology value of $100,000 for a total of $10,000. Tom does not provide any direct value for the delivery. Tom’s total compensation for year 1 of this project will be $90,000.

Doug provides 10% of the sale of $100,000 for a total of $10,000. Doug provides 90% of the technology value of $100,000 for a total of $90,000. Doug provides 20% of $100,000 or $20,000 for the delivery. Doug’s total compensation for year 1 of this project will be $120,000.

Sue provides 10% of the sale of $100,000 for a total of $10,000. Sue does not provide any direct value to the technology. Sue provides 80% of $100,000 or $80,000 for the delivery. Sue’s total compensation for year 1 of this project will be $90,000.

Call me if you have any questions about this formula. Or read Alan Weiss’ *The Million-Dollar Consulting. *He has developed this formula and deserves any credit for its success.

Yes, my clients have used this formula. Yes, I have used this formula.

But most people leap into a business “partnership” without using such a formula. Hence, most businesses fail.

**Do not become another statistical failure. Hire a great coach. Today.**