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Tag : partnerships

Trust and Risk

Carlton Hoyt 9:23 am , December 14, 2011

Trust is extremely important in life science business relationships.Trust is extremely important in life science business relationships (and business relationships in general). I don’t have to ask you to take my word for it, though. According to the sentiment of more than 80 life science manufacturers and distributors who took our 2011 life science distribution survey, trust is the most important factor in distribution relationships according to distributors, and the second most important factor according to manufacturers. It’s not difficult to imagine that trust would be attributed similar importance in other types of business partnerships as well. Despite this, so many companies and individuals approach business relationships with distrust.

Companies often lack an appreciation for the fact that in order to build trust you need to give trust, and giving trust involves assuming some business risk. Even some that understand this still approach partnerships with minimization of risk given top priority. Maintaining the example of distribution relationships, many manufacturers will insist that they get paid up-front for the first few orders. Likewise, many distributors worry that the manufacturers are going to take their money and run.

All of this over-sensitivity to risk needs be put aside in order for trust to be built. Companies need to understand that there are unknowns in dealing with companies that they have not dealt with before, and either take steps to mitigate the risk that do not destroy trust (for example, using neutral third parties as references) or at minimum be willing to share the risk and come to reasonable compromises in the interest of developing what are at the time very young business relationships.

Much of the lasting attitude that will permeate the relationship is built in the early formative period when the relationship is still being defined. This attitude can have a definite effect on the success of the relationship, even in the long-term. You don’t want to start in a position of negativity and then have to put in extra effort to establish a good relationship with your business partner (if a company’s culture allows for such distrust initially, they will likely not take the later actions necessary to mend the relationship anyway). Any given person is far more likely to help a friend than an acquaintance. If you start on good terms you can get an early emotional “in” and you’ll already be one step ahead in building a successful business relationship.

One last piece of advice – don’t let your lawyers get in the way.

"Looking to establish successful life science business partnerships? Want to get more out of your company’s current business relationships? The strategic and business development professionals at BioBM help life science companies develop relationships that meet their long-term goals and contribute to the success of all parties involved. Send us an e-mail and let us know how you want to improve your business relationships."
Blog / Distribution 9:23 am , December 14, 2011

Attorneys vs. Business

Carlton Hoyt 2:04 pm , October 5, 2011

Value your attorneys advice, but remember the rules of business when making life science deals.Last week my father, who is a real estate broker and an attorney, was telling me about a real estate deal that he was working on. The buyer and seller had initially been in relatively good agreement but the seller’s attorney continuously advised his client to take an increasingly risk-averse position, thereby making the deal more one-sided and threatening it entirely. This reminded me of another conversation that some of us on the Life Science Distributors group on LinkedIn were discussing: how many large manufacturers (and this applies to large distributors as well) often have heavily one-sided distribution agreements that minimize their risk but fail to consider their partners. It was mentioned that such agreements are often drafted by attorneys.

My father made a very astute statement: “Attorneys seem to have forgotten the realities of business in favor of minimizing risk for their clients”. While there are exceptions, and there are also certain situations in which extreme caution may be justified, the idea of the statement is too-often true. When attorneys get involved they often do not have a complete understanding of the business environment and / or the situation relevant to a particular business deal. This applies across almost all industries and markets, and life science research tools are no exception.

Whether the issue at hand is distribution agreements, licencing deals, partnerships, service agreements, or just about any other contractual and / or negotiated agreement, remember to take your lawyers advice seriously, but don’t let them overrule the basic rules of business. Almost any deal requires a little bit of give and take, and focusing too strictly on risk reduction can ultimately scuttle what would otherwise be a highly lucrative deal. When your life science company deals with its attorneys, value their advice, but don’t forget the rules of business in doing so.

"Looking for an expert life science deal-maker or business developer to help grow your business? Contact us to confidentially discuss your needs and how we can help you achieve your goals."
Blog / Distribution 2:04 pm , October 5, 2011

Creating Value w/ Cross-Promotions

Carlton Hoyt 4:13 pm , December 7, 2010

Cross-promotions are a very targeted way to reach prospective customers. Small companies can partner to maximize highly effective cross-promotion marketing opportunities.Cross-promotions are a valuable and highly focused marketing tool to drive additional sales. By promoting products to a customer who has purchased a related product, you help ensure that your marketing dollars are spent on a highly targeted audience that is more likely to be receptive to your marketing message. However, creating highly relevant cross-promotions can be an issue for a small company with a limited product offering, but still provides an opportunity to compete with larger competitors.

Life Technologies, a biotech behemoth among laboratory products companies, has no such problems. If they sell a customer a piece of equipment, for example, they more than likely have all sorts of reagents, kits, and even related equipment to promote based on the customers initial purchase. Knowing a customer’s prior purchases allows them to predict their needs, and cross-promotions ensure that they deliver a marketing message relevant to those needs. A small company, however, may sell the kits or reagents but not the related equipment. Cross-promotion is like a puzzle and you can only successfully execute it if you have all the pieces. The pieces, however, can be obtained through “outside” cross-promotions.

Small life science companies can form marketing partnerships to execute outside cross-promotion strategies. For example, if your company sells thermal cyclers but not PCR primers you can partner with another small company that sells PCR primers but doesn’t compete in the thermal cycler space and jointly promote each other’s products. You then gain the benefits of each others marketing efforts – every time your partner gets a sale or a new customer, you get a highly targeted lead, and vice versa. This is not only a great way to drive sales and product / brand awareness, but is also an effective way to develop highly positive long-term relationships with companies in markets closely related to your own.

"Want to reap the benefits of effective and well-executed cross-promotions? Wondering how to best implement and manage a cross-promotion strategy? BioBM Consulting’s highly trained marketing and business staff can build a strategic framework for outside or inside cross-promotion, as well as establish and manage any cross-promotion partnerships. Contact us to discuss how we can help your small life science company drive sales through compelling and highly targeted cross-promotions."
Blog / Marketing Strategy 4:13 pm , December 7, 2010