Clients, suppliers and partners


This posting is part of a series on Partner Management.

Companies exist within a dynamic ecosystem. They continuously interact with the environment in which they operate. Every company is always on the lookout to sell more products at higher prices to existing and new clients. At the same time the purchasing department is eager to build trusted relationships with existing suppliers whilst at the same time scouting new suppliers who can do a better job at lower costs. At either end of the supply chain the relationships are characterized by the fact that money is flowing from one party to another. Clients pay the company and the company pays the suppliers. Revenue minus costs is profit, the cornerstone of every business.

To the business partners are as important as clients and suppliers. Still they typically lack the cash flow characteristic. Partners are those parties that are important to an organization although no real transactions take place. Where the relation between a client and a supplier is hierarchical (the suppliers serves the client), the parties in a partnership work as equals. There are no or only a limited number of transactions. In most cases no money is flowing from one party to the other. And if money is involved then it is even likely that it is flowing in both directions.

The fact that little money is involved makes it often hard to take partnerships all too seriously. In practice partnership are commonly formed ad-hoc. Old buddies meet again after a long time –completely unplanned – and decide that it might be a splendid idea to team up might the opportunity arise. As such there are no formal agreements or expectations. And indeed often there are no results. These partnerships however are still extremely valuable. They are insurance. When a business opportunity presents itself, the relationship is already in place and deals can be made quickly.

Although these old-boys-network-partnerships are not often a money spinning activity, they are still essential to every company. They help in small ways. Examples include: introductions to influential people that you know through your network, opportunities for cross- or joint-marketing or to simply share (business) war stories and gain free advice on various issues. For most companies partners are the business equivalent of friends: they won’t pay your bills, but you can always turn to them for good advice.

In future postings on this weblog I will share my thoughts on how to establish constructive working relationships with partners that really add value.

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