GWBC - August 5, 2009 - Questions and Answers

[Paul Terlemezian]

Here's the PowerPoint File that I used to make sure I knew where I was going.

The answers to the questions below may reference specific slides in this presentation.

GWBC.ppt

Here are the questions that were asked at the very beginning of the session:

1. How do you set up and evaluate an alliance?

Slide 9 - The Eight Success Factors
Slide 23- Alliances Business Plan

2. Once you've established an alliance how do you leverage its value?

Slide 23 - Alliances Business Plan

3. What type of documentation and structure is required?

Slide 14 - Sixteen Types of Alliances The documentation and structure will vary based on the form of the alliance. I have developed a multi-page template. The most important part of the documentation will be the business plan (Side 23)

4. How do you establish, maintain and strengthen an alliance?

I suggest a pilot supported by a Letter of Intent and a one page business plan. After a successful pilot I suggest working with an attorney to draw up a formal alliance (I have developed a template) and include a business plan in it (Slide 23)

5. What should we have asked you?

a. How do I use alliances in my business? It is important to ask me this question since if I believe in alliances for small businesses then I should be using alliances as well. I have developed six key alliances for my business (in the talk I described one of them - the printing company.)

b. What is your favorite question to ask? I liked question 5 so much that I answered it twice. In the talk I suggested that whenever someone tries to sell you something that you should respond (if you have sincere interest) "What do you suggest I do in order to be successful with the purchase of what you are selling to me?" - Be prepared to answer this question as well. We owe it to our clients to make sure they are successful.

6. Once an alliance is established - how often should it be re-examined? What should be talked about?

I recommend a monthly review for the first three months and then at least quarterly for the remainder of the term of the alliance. Also, I suggest a standard agenda that includes opportunity review and "learnings." There may also be periodic reviews of contingency plans to make sure they are still appropriate.

7. How do you determine compensation?

This will vary based on the type of alliance (Slide 14) and is highly negotiable. Both companies need to be profitable and motivated. The more strategic the alliance to the partner the less they will desire of your margins. So, be sure to emphasize the strategic nature of the alliance to the partner - this means how it will help them sell more of what they already have to sell.

8. What criteria is used to differentiate between a strategic alliance and a partnership?

A partnership has well defined specifiic legal liability and tax consequences. It focuses primarily on how to account for revenues, taxes and liability. Strategic alliances are broadly defined and refer to relationsips between two separate business entities that have a mutual interest in creating revenue. They maintain separate tax and liability.

9. Should we align with a competitor?

This may be a very good alignment strategy. Remember Slide 8 (The Hare and the Tortoise?) All alliances have risk and an alliance with a competitor may have more risk than others. The alliance will end at some point so be sure to put safeguards in place. Aligning with a competitor can bring strategic value to both companies and unique value to your clients.

10. How do we protect our trade secrets and IP when the alliance ends?

The best way is to openly discuss this and agree to the form or protection (including penalties) before the alliance is confirmed. Trust and integrity are essential to effective alliances. By developing interpersonal relationships with the top executive of your partner you are ensuriing the protection.

11. How do you optimize social networks for alliances?

This is a great question. The Ning site that you are visiting has been optimized for alliances. The use of groups and the concept of online communities are excellent optimization methods. Please persuse this site and read the blogs and forums on Social Media.

12. Do alliances always have to be 50-50?

They need to be win-win-win (You, the partner, the paying customer) They do not have to be a two way street. The partner may introduce you to opportunities without expecting the same from you. Please read the forum and blog on this site about alliances and two-way streets.



Here are the questions that were submitted on business cards at the end of the presentation:

13. How do I ensure that safeguards are in place?

Here are some additional thoughts that are from Jordan Lewis' Book - Trusted Partners

a. page 12 - before an alliance begins - agree on who will own joint inventions and what will belong to whom after
termination of the alliance
b. page 266 has termination provisions
c. pages 240-243 include ideas about how much information to share

The bottom line is that neither party wants an "empty alliance" (i.e. one that exists on paper but does not produce revenue.)

14. How important is development in finding partners for strategic alliances?

Development means different things to different people. I will answer this from two perspectives - product and money.

Product development may be the primary reason for the alliance.. Each partner has 40% of the solution and co-develop the remaining 20% (versus 60%) so that both get to market faster.

Fund raising to support the alliance can be important but the alliance may actually reduce or eliminate the need since each partner will fund their activities within the alliance.

15. If you are an LLC with partners, how do you structure a strategic alliance?

The alliances will be structured between the LLC and the other entity so the other entity does not need to be concerned with the partner structure. You may also find that it makes sense to create a new LLC for the new alliance to avoid concerns regarding assets of the partners in the initial LLC.

16. How do I target the best networking events to maximize building alliances?

a. Go to events where your partner and or clients go to sell (i.e. trade shows)
b. Segment your business by industry, geography or application and then attend events in those areas
c. Once you've targeted an event - and tested it - make a decision to go "all in" or not participate. You'll need to develop rapport and consistency with partners and this will come from repetitive exposure to build trust and to confirm your commitment.


Please comment with additional questions and I will respond to everyone. If you would rather ask your questions privately please call me or send me an email.

Thanks,

Paul Terlemezian 404-252-8330 [e-mail]