Reaching your customers, negotiating better deals with suppliers, reducing expenses by sharing resources — strategic alliances can be a big boon to business. They aren’t just for large corporations either. Small businesses and even “solopreneurs” can benefit from the right alliances, as well.
“Strategic alliances enable small firms to maintain or increase their competitive advantage in a variety of ways,” says Terri Denison of the Small Business Administration. “Companies can pool their limited resources, such as capital, personnel and information technology infrastructure and means of production. They can obtain more competitive purchase and supply pricing. Expanded market segments and geography can be achieved. Firms are able collectively to access different skills and knowledge needed to take them to the next level individually.”
Finding the right strategic ally is key, of course, and the specific needs of your business and the opportunities in your market will have to be identified. A competitor might actually make a great ally as long as the demand is high enough to support both businesses — think of independent dentists sharing an office, equipment and personnel. A non-competing business with some overlapping needs and a potential new market of shared customers can make a great ally, too.
“Establish criteria to evaluate candidate alliance partners. As examples, review the company culture, management philosophy, willingness to partner, financial profile, and common technologies,” says Dr. Richard L. Weinberger, CPA and small business consultant. “Once the type of strategic partner has been identified, a list of candidates that fit the profile can be compiled. Although the final list will eventually only have one or two potential partners, it is better to start with a longer list knowing it will be “whittled” down to the final few serious candidate partners.”
You also need to determine exactly what you’re looking for in a strategic alliance. Is there something missing in your business that an alliance could fill? Are there new opportunities that a strategic alliance could open up? Make sure the businesses and the people you decide to partner with have the ability to boost your business, and talk to your allies about your ideas.
“By forming a strategic alliance you have partners to bounce ideas off of to help go after the clients that you are marketing to,” says marketing consultant Ross Karp. “We all have different skill sets that can compl[e]ment each other. By working to our strengths and having help with our weaknesses we are maximizing our time and energies.”
Strategic alliances are as unique as the businesses they support. Whether it’s sharing an office manager so you can focus on the core of your business without the expense of a full-time assistant, trading advertising space and marketing efforts with another local business, or something else entirely, setting up some strategic alliances can help you save, help you sell and help your small business succeed.