You have your product (maybe not quite ready to go but close) and you’re looking to take it to market.  Chances are,  you’re now looking to find distributors or strategic partners to help you do that.  Good – selling is HARD and selling a new product is even harder; a good sales partner will generate value for you in more ways than just revenue, providing local market insights, brand credibility, logistical support and more.

But let’s start with the difference between a distributor and a strategic partner. In many cases, the honest answer might be “not much” but when a deal is branded as a strategic partnership, it tends to include elements such as co-development of new products or even equity investment.  This can be a great add when funding is tight, but it can make a poor distribution deal look better than it is and make a poorly performing distribution arrangement harder to disentangle later. Even when the strategic elements look great, test the sales capability of a future partner.

So, deal branding aside, what should you look for in a sales partner? Well, of course it depends on many factors, but something that is often overlooked when a deal is on the table is cultural fit. That’s hard to define but, in my view, it boils down to an assessment of whether you can see yourself spending time with the partner team in the long term – and even more importantly being able to resolve issues and disputes in a professional and respectful way to support a long term collaboration (rather than getting the lawyers involved at the first sign of an issue).  Changing distributors every couple of years is costly and time consuming, with customer confusion potentially derailing your sales efforts and destroying your fledgling brand. 

Spending time to get to know an organization before signing on the dotted line could save you a lot of sleepless nights in the long run.  If all goes well, you might be working together for decades (or be acquired) – and if it goes badly, you might end up in court.  So do your research and trust your instincts: every insight from LinkedIn posts to post-meeting dinners builds a picture to help you answer the question of whether this is a company you want to work with long-term (which is not unlike dating and marriage…).

Beyond that, consider where you want the business to be in the next 5 years.  Not just in terms of revenue growth but also consider what core capabilities you’ll be looking to develop.  Can you grow commercial capabilities in parallel with your partner and how will that work in practice?  How will your regulatory strategy change over that time?  What about portfolio development – how will you access customer insights? If the deal fell over, what would you be left with?

Most importantly, what’s your exit strategy and how will the decisions you make around sales partners now impact on your valuation?  Will potential suitors consider the arrangements you make now to be high or low risk to your long term value?  Consider the contract terms but also the practicalities of exiting a long term distribution deal. 

If you’d like to help in developing a clear and cohesive go to market strategy, please get in touch.  I have successfully created, negotiated and managed (and exited) distribution and strategic partnership agreements and can help you navigate this critical stage in your organisational growth.