GREAT IDEAS FOR ENTREPRENEURS FROM THE THOUGHT LEADERS AT CASEY NEILON
FIVE IDEAS TO MAXIMIZE GLOBAL PARTNERSHIPS
HOW TO FORM SUCCESSFUL OFF-SHORE BUSINESS RELATIONSHIPS
Over the years we’ve helped several clients vet the formation of business partnerships with companies who are not based in the US. These business relationships allow our clients to achieve scale, move up-market and do work that is often not available to be done in the US or that can only be done at a financial loss. There are many benefits to these off-shore partnerships.
However, these relationships can be tricky to form. After reflecting on the situations I’ve seen our clients encounter and even our own experiences, I’d like to put forward five questions that I think can really help you. If you or someone you know is considering an off-shore business partnership, these ideas can serve as a guide to produce the benefits you’re looking for while avoiding the pitfalls.
The Business Opportunity
Before I describe the five questions, I want to outline the off-shore business partnership opportunity as I see it. I would characterize it in one simple sentence. You need the right partners in the right places to do the right things. I’ll describe ways to find and vet the right partners in my five questions below. But let’s focus for a moment on the right places and the right things.
As for places, there are great organizations who do amazing work all over the world. Through our partnership with The Alliott Group, we have encountered so many fine companies who are doing really good work. These companies are not just in Asia or Latin America, two locales often thought of as cheap labor sources. They’re also in Europe, Australia and even Canada.
As for doing the right things, let me provide a framework for how I think of this. The best off-shore partnership opportunities are characterized by:
- Knowledge-workers from overseas, (not manufacturing jobs that belong in the US).
- Qualified, licensed professionals with appropriate degrees and oversight from management teams that understands US and international business practices.
- People who meet or exceed requirements stipulated by US regulatory agencies.
- People with specialized knowledge and skills who can handle highly repetitive tasks and get work done in shifts, often around the clock when US workers are sleeping.
- People who speak conversational English and who quickly grasp complex concepts.
- People who can produce work-product of a high quality and for a price-point that cannot be achieved in the US.
- Organizations who use cutting-edge security and data integrity technologies and practices to protect the data you might share with them.
- A willingness on the part of the overseas partner to understand your business culture, operating model and reasons for forming the partnership and to shape their offering in line with your goals.
So when I describe how to find the right partner, these are the things I think the right partner will do for your organization.
You need the right partners in the right places to do the right things. This is what it takes to succeed in off-shore partnerships.
Five Questions To Ask Yourself
After working on several global partnership initiatives, I’ve come to recognize five questions that I believe entrepreneurs should ask themselves as they seek to form these relationships:
- Who can you trust and how do you know you can trust them?
- What objectives do you hope to achieve through the partnership?
- What do you want them to do for your organization?
- How will you communicate and train them to do the work?
- How will you measure success?
Let’s take a closer look at these questions and along the way I’ll provide some guidance about the types of answers I’ve heard from other entrepreneurs.
Who Can You Trust And How Do You Know You Can Trust Them?
Finding the right off-shore partner is all about trust. This partnership could be a great thing for your business, providing a real competitive edge, or it could be a disaster. Since we’re talking about knowledge-workers, we’re talking about people in a foreign land, really smart people no less, who are getting an inside look at your business and probably getting access to data that you actively protect today. That’s a lot of exposure.
Some entrepreneurs consider this to be too much risk and I understand that sentiment, but I don’t share it. Most cyber-security analysts will tell you that your greatest risk for data exposure comes not from off-shore hackers but from your own employees accidentally doing the wrong things. These things include using public WIFI, leaving thumb drives lying around, opening emails from untrusted sources, not routinely scanning for viruses and the like.
I’m not convinced that sharing private data with an off-shore partner automatically increases your security risks. The right partners, in fact, can help you decrease risks by sharing best-practices in data protection policies and technologies. But how do you find such partners?
Most entrepreneurs are going to use a few channels:
- They’ll conduct online searches.
- They’ll ask for referrals from people they trust.
- They’ll inquire in CEO or CXO networks.
- They’ll post a notice to their LinkedIn network or to LinkedIn groups.
- They’ll join an international network for their industry, (like The Alliott Group is for us), that specializes in these types of introductions.
Of all of these approaches, I tend to think of the international networks as the most effective. Why? When these organizations do their jobs well, they:
- Conduct the sort of due diligence that you would do yourself to vet the opportunity. They perform background checks on the principles, make on-site visits, verify licenses and certifications of key personnel and analyze business practices and work-flows to spot regulatory violations.
- Only allow companies into their network that meet strict standards.
- Require their membership to update their certifications and licenses to remain in good standing.
- Aggregate a number of companies who often do similar things, which gives you options to explore. But instead of starting with a pool of potentially hundreds or thousands of companies to vet, you have a much smaller, already qualified list.
In essence, these types of international networks save you a lot of time and probably ask questions you might not have thought about because they’re in the business of asking those questions. This helps you go forward with greater confidence about who you can trust.
What Objectives Do You Hope To Achieve Through The Partnership?
I think it’s important to be crystal clear about the specific objectives you want to achieve through the partnership. I view the most effective off-shore business relationships not as outsourcing jobs that could be done in the US but instead as insourcing work that probably can’t be done in the US or at least not cost-effectively.
That’s an important distinction. So, if you share that perspective, the question becomes – how do you leverage that off-shore capability to create competitive advantage for your company? I recommend that you make a list of the top objectives that you want the off-shore partnership to achieve for your company.
The more specific you make those objectives, the more measurable they become so you can know, over time, if the partnership is working for you. I’ll describe this in more detail below in the section on measuring success. When I’ve worked on these types of deals in the past, the objectives I’ve tended to hear include:
- Increasing efficiencies: getting sequential work done faster. Some business models, especially those that deal with data, are sequential in nature, meaning that step 2 (higher-level, more analytical work) cannot be completed before step 1 (lower-level, more repetitive tasks). If your business only deals with step 2 but it’s hard to get step 1 completed, an off-shore partner could have a positive impact on your efficiencies and your ability to take on more work.
- Achieving scale: leveraging a much larger work force to help you take on larger deals.
- Creating differentiation: using your off-shore partnership to tell your marketplace a better story that makes you more attractive.
- Enhancing revenues through white–label offerings: re-selling the off-shore partner’s capabilities through your brand. In most instances, US companies provide oversight and management of the off-shore partner as their value-add to the engagement.
While you might have somewhat different goals than these, the important thing is to be clear in your mind as you form the relationship what “success” looks like to you. I recommend that you write down your objectives and share them with colleagues so everyone involved in the decision is aligned.
What Do You Want Them To Do For Your Organization?
I believe it’s also important to be clear about the outcomes the off-shore partnership should produce for your company. Here are the kinds of outcomes I hear entrepreneurs talk about:
- Increase our time to work on projects or initiatives of greater value.
- Allow us to take down bigger deals, better clients and earn more.
- Empower us to move up-market and play in a much bigger league.
I recommend that you make a list of the outcomes you want to achieve as a result of the off-shore partnership and share these will colleagues.
How Will You Communicate And Train Them To Do The Work?
This tends to be a major concern for US-based entrepreneurs, especially those who are already time-starved. Even if an off-shore partner already has expertise and refined business processes for the kinds of work you want them to do, you will still probably want things done a certain way. This will require training and communication.
In my experience, most off-shore companies will assign you some type of client account manager whose primary job is to make you happy and make the business relationship successful for them too. This person is crucial to achieving short-term success and to protecting your time. Usually this person has excellent English language skills, a core understanding of the work-flows and regulations and can marshal their team to your needs. Treat this person well and you will realize many long-term benefits.
As for training, there are more options for that today than ever before, including Skype, email, video conferencing and, when necessary, on-site visits. But it is also entirely possible, given today’s technology, to form a successful partnership without ever travelling to see the off-shore partner.
How Will You Measure Success?
This is the one area where I see entrepreneurs making some big mistakes. I think it’s crucial to establish specific benchmarks that are measurable and then pick defined time-periods in which you will take those measurements. If you don’t set specific benchmarks, it’s easy to get caught up in execution without making course-corrections based on hard data.
In this article I’ve described several reasons to form these relationships. But now I’d like to put forward some suggestions about how to make these measurable. Let’s assume that one of your stated goals is to achieve scale by getting sequential work done faster. Let’s assume you handle step 2 of this work and you want the off-shore partner to handle step 1. Here is how to make this specific and measurable. Let’s assume:
- Today you are completing 10 projects of a specific nature every year that generate X revenue-per-project.
- You’ve set a goal of increasing from 10 projects a year to 20 while maintaining your current revenue-per-project.
- You estimate it will take 24 months to hit this mark. During those 24 months you will form the off-shore partnership and scale your operations to handle the increased work-load.
- At the 24-month milestone, you review. Did you scale from 10 to 20 projects? Did you hit your revenue-per-project goals?
Now let’s apply this methodology to some other goals. Let’s assume you want the off-shore partnership to free up your time to work on more valuable initiatives? How much time? If you want to take down bigger deals, how many deals? If you want to acquire more customers, how many customers and what type of customers?
The important thing is to be specific, set milestones and then measure. This helps you track your progress and feel good about the decisions you’ve made. If you don’t hit certain benchmarks, this process allows you to assess the root-causes for missing the mark and then make course corrections.
I believe that the right off-shore partners in the right places and doing the right things can really help US-based business grow. But forming the relationships can be tricky. The five questions I’ve put forward here can assist you in assessing your situation and accelerate you toward a successful relationship. If you would like to bounce ideas off me or get a second opinion of what you are thinking today, please reach out to me on LinkedIn or send me an email.
Suzanne Olsen – CPA, SHAREHOLDER
I am a Manager and Shareholder at Casey Neilon. In this role, I provide consulting, accounting and auditing services to our clients. I provide leadership and training to our staff and I get to learn and experience new things every day. I have over fifteen years of accounting and auditing experience in a wide variety of industries that include public accounting, construction, manufacturing, small business, captive insurance, risk retention groups, and self-insurance groups. I have over ten years of individual and business tax preparation experience that includes multi-state tax preparation.