Key Partners - Suppliers And Alliances

Who will help your business succeed?
This is the question that sits behind the Key Partners box on a business model canvas.
It acknowledges that you’re going to need to work with others, and you’ll need relationships built on trust and specialisation.
You can’t force a partnership, and you can’t make people do what’s best for you; these alliances are based on mutual interest and are constantly evolving.

Partners might not be the first thing you think about with your Business Model, but they can make or break your company – good partners let you focus on your strengths and cover your weaknesses, bad partners can pull the rug out from underneath you, often at the worst possible times.
So there’s a carrot and a stick urging you to think these through – the benefits of good agreements, and the threat of becoming dependent on the wrong people.

As a starting point, there are two main types of people or organisation in your Key Partners box – suppliers and alliances.

Suppliers
You don’t have to own everything within your company, it often makes more sense to partner with other specialists.
This is where a supplier comes in; you’re paying them to make something or serve someone or bring stability and professionalism to your business.
e.g. hiring a consulting firm, renting space from a landlord, engaging a manufacturer, partnering with specialist advisors with rare or unique knowledge.
You don’t own these like you would in the Key Resources box, they have their own business models and their own brands, but your skills align and money changes hands.

A wise entrepreneur will want to have a plan B for each of their suppliers, so that they’re not held over a barrel in the future.
That might mean feeling confident that someone else could be your manufacturer, or could host your shopfronts, develop your menu, supply you with staff or customers, etc.
If you absolutely need them or depend on them, they should probably be a Key Resource in the future.
That might mean recruiting new people, starting a new division of the business, or proactively taking intuitive corporate knowledge and making it tangible and accessible (e.g. creating detailed instructions and training materials).

The reverse is also worth considering – are their things in your Key Resources box or in your Key Activities box that could be done by suppliers in the future?
You might pay a bit more for them in the short term, but outsourcing gives you greater focus and reduces your financial commitments.
i.e. moving to a coworking space with access to meeting rooms vs renting an office with a permanent meeting room.
Or hiring an advertising agency rather than building an in-house marketing team.

Alliances
“Surround yourself with people who would mention your name in a room full of opportunities”

Forming alliances sounds like medieval politics, but it’s an essential part of business.
People do business with people, and they do business with people they know, like and trust.
That means you need to become familiar to other players in your field and adjacent fields, then establish a pattern of trustworthy behaviour.
These alliances might not cost you any money, but they’re hard to do in a hurry.
As they say, you’ll want to “dig your well before you’re thirsty”, and start building credibility and connections before you urgently rely on them.

Alliances are different to suppliers, both in terms of power dynamics and in how money changes hands.
An ally might send lots of customers your way, which can be extraordinarily lucrative, without the expectation of a finders fee.
In return, your job might be to make them look good, offer favourable terms, keep a genuine friendship or jointly bid on future projects. 

Sometimes an ally is less of a friend and more like a regulator – whose job is to check that you’re legally compliant and can be trusted in your work.
You’re not offering them friendship and long lunches, but you’ll need a plan for how you’ll keep on their right side and are constantly meeting their criteria.
In the social impact industry, where we deal with fields like education, healthcare and poverty alleviation, these regulators are no joke.
There are good reasons why they are in place, and they can shut down or discredit your entire operation if they suspect you can’t be trusted.

Proactive Relationship Maintenance
Both of these Key Partners require proactive relationship maintenance.
All assets need maintenance – if you value something, you’ll need to keep it relevant and in good condition, and your suppliers and alliances are the same.
Proactivity is crucial – you want to keep communication open long before you suspect there might be an issue or misunderstanding, so that you’re not starting by putting out fires.
It means that if there is a change on the horizon (such as a supplier facing constraints or an ally not sending you as many leads), you’ll find out with a decent amount of warning.
If you read sales advice from top salespeople, you’ll see that they do this naturally – checking in with people, following up on comments they’ve made in the past, and closing the loop when a customer is sent their way.
It can be as simple as “Thanks for sending __________ our way, they were lovely and we were able to help them to _________”.
Easy to convey, it shows you appreciate the referral and that you consistently serve people well.

Some of my clients have neat strategies for this kind of proactive relationship maintenance.
One has a dedicated gift budget, so that whenever she hears about one of her customers having a baby, getting married or celebrating a milestone, she instantly sends something thoughtful, with zero expectations.
Another has a rolling 3 month file of people to call, so that they never go more than 3 months between check-ins, messages or catch-ups.

You might think “Sure, but why is this relevant to the Business Model Canvas?”.
Because if someone is that crucial to your business, you need a plan for how you’re going to keep them around.
Suppliers can be bought and swapped, but they take time to establish and people love to talk about who’s good to work with (and who is a nightmare).
Alliances involve people and relationships, and if you muck them around or treat them badly, you’ll begin limiting the rest of the business.

The ROI Of Seeds
Your Key Partners are essential to your model.
If you suspect that a partner isn’t essential, it might be time to bring that skill in-house or drop it from the canvas altogether.
But in most cases, Key Partners are helpful people who make your life easier.
The effort and cost of establishing and maintaining these relationships is like the cost of seeds – the return on investment is phenomenal, but takes a while to pay off.
Don’t cheap out on the seeds.
Key Partners might not be customers, but they are valuable and need to be looked after.
The payoff takes a while, but so do the signs of trouble.
Neglect your partners and it might take years for issues to emerge.

It’s worth remembering that partners are great for managing uncertainty.
When you are suddenly presented with a huge roadblock or lucrative opportunity, good partners will help you handle a crisis or deliver a tremendous result.
Not every seed becomes a huge tree, but the ones that do can change the direction of your business – for the better.
And as the Chinese proverb goes; the best time to plant a tree was twenty years ago, the second best time is today.