For so many tech start-ups and new businesses, one way to boost performance, increase profit and stay competitive is teaming up with seasoned professional and companies that are skilled in the game. Through these firms, the new start-ups can have an amazing opportunity to participate in government contracts as subcontractors and also get the exposure and experience to scale through the competitive business landscape while receiving detailed guidance from experienced contractors.
In teaming up with other businesses, there are some level of partnership and agreement that must be entered into by both firms. Some of these terms include the following:
Strategic alliance: Strategic alliance is a relationship between two or more businesses in orders to pursue a set of agreed goals and meet a critical need while remaining independent. This allows companies, especially start-ups, to expand their documented capabilities and pursue projects beyond their normal capabilities.
Teaming agreement: This, on the other hand, involves two firms, partnering on a single proposal. It can also be described as a prime/subprime contract between two parties where one of the teams pursue a contract as the prime vendor. The terms between the prime and subprime vendors are outlined in the Teaming Agreement. One of the benefits of this type of contract is that it allows parties to pool resources from a limited purpose without acquiring a joint venture entity.
Collaboration contract: This is also known as a collaboration agreement; it involves two people or companies collaborating to pursue a defined goal. It is a specie of unincorporated joint venture because the collaborators must also contribute resources and decide who owns the proceeds.
Joint venture: This involves two different companies, individuals or businesses coming together to partner as joint parties. These companies agree to combine their skill, knowledge, efforts, and resources but not permanently. Each party maintains their own identity.
Things to consider when choosing a partner
As a start-up, there are so many factors to consider before entering into an agreement or any form of contract with tech companies and professionals; some of these factors include:
- Positive client standing
- Clarity of commitment and communication
- Business ethics and trust
- Capabilities to deliver on time.
- Does your contract allow for Subcontracting? Check the fine print.
Finally, every tech start-up entering into an agreement with professionals must understand all terms in an agreement before teaming up with one.