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Building a partnership: How to link up with other service providers

Partnering with your fellow IT service providers can help expand the services you offer clients without incurring the cost of hiring and retaining talent.

There is a gem hidden behind your relationships with other colleagues in the industry: partnership. Building a...

partnership with others has many benefits for you and the other party. Along with these benefits there are also pitfalls that can be avoided if the relationship is properly defined from the onset.

There are a few ways in which you can facilitate a partnership with another service provider:

Hire a subcontractor

The first option is to hire a partner as a subcontractor of yours. As your business grows, the need for an extra set of hands or talent that you do not have on staff becomes more prevalent. Having a subcontractor is a way to fill that void without having to bear the cost of that talent on a consistent basis.

An added benefit with this option is that you can provide a broader range of skills for clients than you could otherwise. With this comes the ability to expand your service offerings to better serve them. The more you can offer your clients, the more they will rely on you.

Become a subcontractor

Partnering among partners is a great way to expand your team, join a team or share the burdens between two business allies.

Another way in which a partnership can work: You become a subcontractor for another company. The same benefits apply as above, but for the other service provider. The benefit that you get is the ability to generate another revenue stream. When you let other service providers know about your skills -- and how you can help them achieve their goals -- you can become the go-to person for when that need arises. There are other advantages as well: You don't have to find or manage the client and you get your marching orders on what the final deliverables will be from someone in your field that you can effectively communicate with.

Enter a reciprocity agreement

The third way of building a partnership is a reciprocity agreement. This is where you and the other service provider have a mutually beneficial agreement where you can cover each other, if necessary, and fill in the gaps. This is a combination of both methods stated above. You and the other party get to expand your team by utilizing each other's talents. You can also use a reciprocity agreement to fill in for each other or even create coverage groups, when appropriate, to split the burden of workloads such as staffing a help desk.

Additionally, I have even seen this type of agreement instituted from a business ownership perspective. For example, if a principal in either business was to pass away that principal's business could be sold or passed along to the other partner and vice versa. This approach is typically funded by life insurance policies taken out by both partners on each other.

Put a formal agreement in place

We have gone into three different ways of building a partnership with other service providers. However, those relationships have to be managed properly for them to prosper. A formal agreement/contract should always be in place. The agreement will outline the full nature of the relationship. Some of the key elements that need to be addressed in your agreement include confidentiality, ownership, conflict resolution, term and termination, independent contractor status and liabilities.

Partnering among partners is a great way to expand your team, join a team or share the burdens between two business allies. You will have to weigh the pros and cons in your business to decide if this is a worthwhile path for you. Always protect yourself with proper agreements to make sure that you avoid any misunderstandings between you and the other party.

Next Steps

Tech startups pursue the art of building a partnership with channel firms

Learn about opportunities for alliances with new kinds of partners

Find out how channel companies are partnering with cloud vendors

This was last published in July 2016

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