In case you missed it, last week Ciara Pressler and I addressed the question of how to meet prospective partners.
This week we're thinking about how to ensure that a partnership is fair and square when there's no money involved.
Q: How do you make sure business partnerships are equal, especially when there's no money involved?
It’s vital to write out exactly what is expected of each party. When things are in black and white, it’s easier to see if one party is carrying more weight. If elements of the partnership carry value, ie free show tickets or comped advertising, do the math and make sure it’s equitable. You can apply numbers to most in-kind products and services which definitely helps.
The key is recognizing that money is valuable only because it is easy to exchange for other things. Put differently, money is a means to a business end; it is not the end itself.
So if you want to do a deal but nobody wants to lay out actual cash you should ask yourself two questions: (1) If I received money from this deal, to which ends would I use it? (2) Is this partner able to deliver any of the ends which I’d otherwise plan to achieve by spending cash?
The answer to question (1) should be an easy one if you have a good handle of your business and your business model. Question number (2) is much harder and you can only answer it when you have a good understanding of who your prospective partner and the types of non-cash value they can provide. Great social presence? They can do some marketing. Great relationships? They can make some introductions. Great design? They can spruce up your logo.