Many startups or early-stage small businesses think they need to become the next billion dollar unicorn, and then sell it to a large corporate, writes Ryan Cohen, co-founder of Merchant, a South Africa-based alternative lender. capital.
The truth is a bit more shocking. Most startups don’t move past their first few years in business for a variety of reasons. But the idea of small businesses forming working relationships with large corporates is becoming more topical with the potential for symbiotic relationships.
The theory is great. Startups get a steady revenue stream and access to markets to distribute their products, and corporates become more agile and innovative through new energy, products and services. It sounds like a match made in heaven – but it’s important that the rules of the game, and the outline of the engagement, are clarified up front.
So how do you make the corporate-startup relationship work? There are four major boxes that need to be ticked.
- work hard and do homework
Many successful small businesses seem to be successful overnight – but no one sees the years of late night labor and grind that have led the business to this point. One of the biggest reasons startups fail is because they have a product, but no distribution model. Partnering with a corporate can give you scale, but you have to understand how your product will add value to the corporate and their customers, and follow the right process.
It’s also important to know and recognize what each party brings to the table. Corporate clients deliver scale, a trusted brand, strong infrastructure, deep experience and expertise, and powerful data. Start-ups and early stage businesses offer agility, the ability to take a huge risk, a disruptive mindset, simplicity and speed.
- connect with the right people
For a startup to be successful in a relationship with a large corporate, it is important to have an internal champion who is passionate about the value of partnership. This individual should have the ability and ability to navigate the bureaucracy to ensure that the startup is associated with the business entity that will benefit the most from its products and services.
On behalf of the startup, make sure one of your founders is running the relationship, to show how important it is to you. And when new opportunities present themselves, a senior person would be well placed to identify them and lead them, thereby ensuring deeper penetration of startups within the corporate.
- Define clear, measurable success metrics
It is important that corporates and startups align on values, measurable goals, what success looks like, and timelines. The timeline should include specific, measurable and time-bound objectives for the project. A real win that deepens the partnership is becoming a line item on the scorecard of the responsible team. It is a huge benefit for the start-up to understand how it works, as it aids in the output and creates much better alignment.
- keep working on the relationship
While there is always an initial honeymoon period while the partnership is getting off the ground, over time the product or service becomes part of the normal course of business. It is important to stay relevant. Set a meeting and reporting rhythm and stick to it. And build relationships as broad as possible, so if corporate team members move on, you have an existing relationship with team members and new replacements.
As South Africa responds to the COVID-19 pandemic, relationships have never been more important. If we can carry forward this collaborative spirit through our social, political and economic environment, not only will startups, small businesses and corporates flourish together, but South Africa’s entire ecosystem will grow as well.