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Compete or collaborate?

April 1st, 2013 / By: / Feature, Management

Partnering with a competitor is a little like getting married—choose your partner carefully, and you both may reap rewards.

The question of competition vs. collaboration is a complex and challenging issue for any business or industry. The nature of the tent and event rental industry magnifies the need to carefully analyze the pros and cons of entering into a partnership with a competitor.

Most companies have similar goals: to provide the best possible customer experience, to maintain and increase market share and to make a profit. But when it comes to achieving those goals alongside a competitor, as the saying goes, “the devil is in the details.” Much like any other major business decision—purchasing new equipment, adding services or bringing new products on line—a host of factors must be considered. And in the end, the decision is often based on trust.

“The biggest concern when collaborating is ensuring that those you collaborate with can actually deliver on their commitments,” says Joe Taylor, director of sales and marketing for Classic Party Rentals – Chicago, McCook, Ill. “The client is yours, regardless of whether or not you’ve subcontracted out some of the work, so you hold the responsibility for delivering the final product. In business, as in life, choose your partners carefully.”

What are you afraid of?

A first step to exploring a potential partnership is to identify fears about working with a competitor. A common fear among small and midsized rental companies is that if they partner with a “rental giant” in their region on an annual job, they could lose the full job the following year.

Steve Traube, owner of Traube Tents and Structures, Columbia, Ill., lists a number of fears that discourage collaboration between tent and event rental companies: “Threat of stealing business, client going direct. Lack of same quality standards. Lack of safety standards. Potential for equipment damage. Damage to our reputation for their actions.”

All are legitimate concerns. However, fear should not paralyze a company from making a decision with potential benefits. By discerning these fears, you will start to form a framework for critera that will help you choose the ideal partner.

A second step is to identify your own company’s strengths and weaknesses. A company that is capable of understanding its own limitations is more likely to bring in the right partner. In the best partnerships, companies complement one another.

Open communication

In a business partnership, as in a marriage, success requires open, transparent communication from the beginning. “A good partnership depends on all parties involved having a mutual understanding of the client expectations for each project,” Taylor says. “Just as we manage our sales and operations organizations with a culture of excellence, we also must manage partnership relationships in the same manner. In the end, the partnership or collaboration should be invisible to the client. The only thing the client should see is the excellent event that has been produced.”

When working with a competitor, it is important that partners are treated as members of the same team. If all parties are able to buy in and are fully engaged, they will provide the high level of service clients expect.

A benefit to transparency is that all parties will have a greater understanding of how their specific role fits in the larger picture. It is important to ensure that all partners have all of the critical event details and are kept in the loop throughout the process. The special event industry is synonymous with change, and when—not if—change happens, all partners need to understand the event goals and be flexible enough to make those goals happen.

A word of caution: While transparent communication contributes to a successful partnership, it may also accidentally open the door for disclosure of proprietary company information. Prior to partnering with a competitor, each business should identify which information is proprietary and inform each member of the internal team. In some environments, it is pricing; in others, it could be install techniques or network relationships. Develop safeguards, brief staff and implement a process to prevent disclosure from the beginning.

Assess the relationship

Is it possible to avoid bad partnerships? Most relationships, business or otherwise, experience bumps in the road. Traube compares entering into a partnership with a competitor to hiring an employee.

“Interview, assess past performance, future opportunity, etc.,” Traube says. “You never seem to know exactly how that relationship will go until you’re married or at least date for a while. Look for all the things that make for a great partnership and if you’re not getting them, talk to your partner and tell them you’re not happy. If you still don’t get what you need, then it’s time to move on.”

As with any business decision, we want to believe that if we have done our due diligence, the rest will fall into place. However, partners should continually assess the value of the relationship to ensure it is paying the appropriate dividends.

“It needs to be a win-win for both parties,” Traube says. “One sign of a great partner is one that will alert you to a problem and allow you to fix it without involving the client if possible, or protect you from the client if possible. Great partners are companies that will extend terms when they’re really needed and also pay quickly when it is necessary. They will refer you without expecting anything in return, but always know they will get something in return.”

Given the potential pitfalls of collaborating with a competitor, why would a rental company consider taking such a step? Taylor lists a number of upsides for a business willing to test the waters.

“Aside from generating new revenue streams, collaboration with other companies allows the event rental company to expand their levels of expertise into new areas of the event production business,” Taylor says. “By collaborating with an expert company in a specialty field like lighting, power, sound, clearspan structures, etc., your production staff is exposed to the full possibilities of what can be done with an event space. By establishing strong collaborative partnerships, it gives your sales staff the confidence to sell larger specialty events.”

The next time you’re faced with the opportunity to collaborate, remember to do your due diligence, find a partner that is the best fit for your company and assess the partnership throughout the relationship. Unique projects offer the opportunity to expand and grow your industry network, increase market share and presence and form relationships that can benefit you and your company for years to come.

Brant McWilliams is the Midwest regional manager for Aztec Tents.

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