Selling naval patrol boats, fire boats and police boats for Metal- Craft Marine Inc. has led Bob Clark around the world and into many memorable situations. But his fondest memory is sharing his cramped office on the Kingston, Ont., waterfront last year with U.S. Navy Combat Craft Crewman (SWCC) Master Chief Kelly Webb, a Special Warfare veteran and 30-year “boat guy.” Over late-night pizza and beer, Clark, representing the 100-employee MetalCraft, worked with Webb, a project manager representing Brunswick, the world’s largest boat-builder, to fine-tune the design for an ultra-fast patrol boat the two firms would sell together.
One Saturday night near the end of the process, Clark and Webb couldn’t quite agree on the width of the side deck. So, they built a life-sized mock-up out of empty beer cases. “We had to go out and buy a few more cases,” Clark jokes. Last spring, the Brunswick/MetalCraft team scored a $10-million contract from the U.S. Coast Guard for 10 long-range patrol boats—and possibly 20 more. Clark has done a lot of deals, but he still gushes about the long nights redesigning patrol boats with Webb: “As a Canadian, you don’t have access to that kind of person very often.”
That’s just one of the benefits of alliances. For entrepreneurs who feel like lowly muggles at the Hogwarts Yule Ball when they’re chasing big contracts, partnerships and strategic alliances represent leverage, contacts and credibility. Got a surefire idea for a new product, but no one to execute it? Are your margins so slim you can’t give your great product the marketing push it needs? By teaming up with a company with market knowledge and existing sales platforms, you can save hefty upfront investment while sharing in a bigger upside.
But there’s nothing magical about alliances. You have to work hard to find compatible partners, then work harder to define how the alliance will work. Consultants Jonathan Hughes and Jeff Weiss of Boston-based Vantage Partners estimate that 60% to 70% of alliances fail. As they wrote in a 2007 Harvard Business Review article, “Because alliances involve interdependence between companies that may be competitors and may also have vastly different operating styles and cultures, they demand more care and handling than other business arrangements.”
Clark has lots of advice on handling bigger partners. For 25 years, MetalCraft has been a small fish in a big ocean, building one-off aluminum patrol boats, fire boats and police boats for the U.S. Navy, U.S. cities and government customers from Nigeria to the Middle East. Brunswick, maker of the near-legendary Boston Whaler, also serves this market, but with fibreglass boats. While these boats are easier to mass produce, they don’t have the same toughness, speed or bulletproof capability as aluminum craft. So, when Brunswick went looking to expand its share of the patrol boat market, its commercial and government unit teamed up with MetalCraft to create a new line of 11-metre patrol boats. The deal gives Brunswick access to new markets, while enabling MetalCraft to leverage Brunswick’s worldwide salesforce. (To dodge “Buy American” sentiment, MetalCraft will build its joint-venture boats just across the St. Lawrence River at a new facility in Cape Vincent, N.Y.)
Clark offers these pointers for building strong partnerships:
Choose partners with similar values.
“This division of Brunswick has the same mindset as us, only in fibreglass,” says Clark. Both teams believe in product quality, and that customer relationships just begin—they don’t end—with the sale.
Even the best partnerships can start slowly. Clark wrote the first draft of the partnership agreement, Brunswick rewrote it, then Clark rewrote it again. He says the contract went back and forth 20 times. Creating a manufacturing and sales partnership took twice as long as expected.
Work together as soon as possible.
Even as the partnership contract was being negotiated, MetalCraft and Brunswick staff were submitting joint bids for deals just for the experience.
Expect the worst.
At the final sign-off, Clark was shocked to find Brunswick’s lawyer had introduced five new clauses favouring his client. Clark refused to accept the new clauses and got them removed. “With every contract, you have to be able to walk away from the table,” he advises.
Share your expertise.
Clark says the alliance has helped Brunswick realize the value of small-business “frugality.” While MetalCraft spends less on marketing, the company shows up on page 1 of a Google search for “patrol boats”; Brunswick is far behind. “As a big company, Brunswick forgets you can do a lot with a small amount of money,” says Clark. MetalCraft also has introduced Brunswick to a host of cost effective Canadian suppliers—including its web-marketing consultants.
Build respect into your partnership.
“You have to treat each other as equals,” says Clark. “There are ways you can put this into a contract.”
Don’t bet the farm on one alliance.
Clark says MetalCraft aims to keep its partnership-related work to less than half the company’s total revenue. “Never let a contract get bigger than the company,” he advises. Alliances can do wonders for your reach and reputation, but your company has to be able to continue and thrive long after the partnership has run its course.
Rick Spence is the Toronto-based author of the Canadian Entrepreneur blog and a consultant on marketing, strategy and business growth. You can reach him at firstname.lastname@example.org.
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