Start-ups exist because of an unmet need in the marketplace and the relevant knowledge of an entrepreneur. However, once the start-up product or service has reached maturity and competitors appear, small entrepreneurial companies are usually faced with the difficult problem of finding profitable new products or services to offer. At this stage, with limited resources and markets, many companies fade away.

I’ve found that strategic partnerships with other small companies can provide needed new products and services. The key is that you have assets such as a trade reputation, sales offices, strategic factory location, certifications, etc. which are valuable to your prospective partner. In particular, this strategy works well when the strategic partner is a small, foreign company that wants to enter the North American market. Likewise, your product may need a partner to enter a foreign market.

Once a partnership is established, continued top management attention in both companies is required to make it work. Otherwise, one will probably begin to treat the other as a customer not entitled to internal information and plans. As partnerships have lives that may not survive a change in management, a prenuptial agreement is always a good idea.

When planning a new venture, create proprietary assets which will be of value at a later date to a potential strategic partner.