Frozen liquidity puts a chill on growth and expansion. Even companies with no financial pressure are cutting costs and tempering ambition because they think it's the prudent thing to do.
So expect to hear the term “strategic alliance” more and more. “Partner” carriers and similar arrangements are an important element of trucking and logistics. Instead of a big cash outlay or ownership tie-up, a well-reasoned service agreement can extend your capabilities. It's a win-win, right? Not always. These agreements break down for lots of reasons:
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It's a deal done on the fly. Two CEOs meet on a golf course, get to talking, and shake hands before the people who have to implement the agreement even know about it. This is a business arrangement. Make it too personal or informal and you risk losing both the deal and the friendship.
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Your arrangement may involve sharing closely guarded information, including customer contacts. Lay down the ground rules: What access should each partner have to proprietary information both inside and outside the scope of the deal?
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If the guy who's been championing your company suddenly decides to bolt, your partnership may vanish, too. Establish relationships with more than one decision-maker at your partner company.
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Someone wins, someone loses. A solid, productive partnership isn't a game with a winner and loser. If you want something valuable from your partner, you have to have something equal to give. You're asking for trouble if you over-inflate the value of your side of the deal.
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Most partnerships fail because at some point someone doesn't tell the truth. They exaggerate their capabilities or flat out lie to enhance their position, and as a result, the partner loses money, the trust of a valuable customer, or both.
A lie can happen at nearly any point in the transaction, and when it does, it creates a weak point that can snap under stress. Think of the dispatcher who puts an extra skid of freight on the trailer and tells the customer the vehicle broke down when the shipment is late. Think of the customer who juices up volumes to get better pricing. Think of the new sales rep hired on the promise that hoards of customers will follow. Think of the broker who tries to pass himself off as a carrier and double-brokers freight he scooped off an online board. Think of the manager whose fleet size expands and contracts depending on who he's talking to.
It amazes me what people will say and do to get business. They'll tell the same lie day in and day out until they believe it to be fact.
To help weed out fact from fiction, do two things. First, lead by example. People watch and listen carefully to the leaders of their companies. If you stretch the truth, so will your employees. Second, trust but verify. When credit is tight, trust and credibility are your best assets.
This is a small industry, and everyone seems to know everyone else. The “six degrees of separation” you hear scholars refer to is just one degree of separation in the trucking industry.
A strategic alliance might be just the thing to excite customers and build sales. But before you hook up, pick up the phone and check out your potential partners. Thoroughly.
Mike McCarron is managing partner at the MSM Group of Companies, which specializes in transportation and logistics service between Canada and the United States.
