Getting financing is more than just a financial transaction. The strategy is also important in a financing or credit agreement. This can relate to control, cooperation, business operations, guarantees, availability of a network, coaching, and advice. Agreements about these matters mean your financier is a strategic partner.
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A strategic partner is a person or organisation. It can be a business angel or a venture capital company. Important competitors, customers, suppliers, and acquisition candidates can also be among your financiers. By considering these parties, you decide what an investment from a strategic partner means to your company.
Advantages and disadvantages of strategic partners
Collaborating with a strategic partner gives you more than financing alone. You gain access to new knowledge, experience, technology, and markets. You may also achieve your goals faster with strategic partners.
But there can also be disadvantages. You may need to use the partner's marketing and distribution networks. Or market your product under the partner's brand name. A condition for financing may even be that the partner gradually takes over your business.
Do you want to know how to approach cooperation from an organisational and legal perspective? Learn more about business structures with one or more business partners.
Finding financing for a specific purpose sometimes requires a creative solution. Entering into a partnership such as a joint venture may mean you do not need extra financing. In the case of a joint venture, you carry out an activity together with another company. Each party is responsible for a part of the investment.
Franchising as a financing solution for rapid growth
Franchising is a common way to grow quickly in some sectors. Opening several branches brings high investment costs. If you choose the franchise model these costs transfer to the franchisee. You then become a franchiser.
The franchisee looks for the necessary financing to start their business. They can often make use of a financing arrangement that you, as a franchiser, have arranged with a bank.
A franchisee has more freedom than a company manager in paid employment. But they do depend on the franchiser’s decision on certain things.