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What business owners should know when working with other businesses

On Behalf of | Jan 10, 2024 | Business |

Businesses collaborate or cooperate with one another for countless reasons. Perhaps they both operate in the same industry and collaborate on major projects. Maybe one company provides goods and services for the other. Working with another company can give an organization access to valuable talent or intellectual property, like patented production processes.

Such arrangements can be mutually beneficial when they work well. However, they are also fraught with risk and challenges. What do executives, owners and other key players at companies need to know about doing business with another organization?

Communication is key

Effective communication between representatives of the two businesses may be crucial to the success of any joint endeavors. It is therefore very important to establish an official pathway of communication and possibly to designate specific parties to manage communications between the companies. Having a direct line of access to a specific individual can make it easier for representatives of the other organization to reach out whenever there are new needs or issues to resolve. Both organizations should share information about any delays in meeting goals or changes to cooperative plans as soon as possible.

Get everything in writing

Doing business with another company instead of the general public can lead to a false sense of security.  Organizations may sometimes rely on verbal agreements between representatives of the organizations instead of securing written contracts for all major agreements. While Pennsylvania does enforce verbal contracts, having custom, accurate contracts in place for all transactions and projects can help protect both parties and limit the risk of conflict. Contracts should include all relevant details about a cooperative project or arrangements between the companies.

Complacency is the enemy of success

In business as elsewhere in life, comfort and complacency can lead to poor performance and unmet expectations. Even when companies have done business with one another for a long time, it is important to continually cultivate the working relationship between the organizations.

Those who take the time to carefully redefine the scope of a relationship as circumstances evolve, and negotiate new contractual terms when necessary, can make the long-term preservation of a functional business relationship more feasible. Doing business with other companies can potentially help businesses to increase productivity and profits if there are proper protections in place.