One of the most under-utilised and also one of the most effective methods of generating new revenue streams for small businesses is forming strategic partnerships.
A strategic partnership or alliance with a like-minded company or industry group can provide an array of benefits for your business, such as the opportunity to access a new resource, expertise or market segment. This can help boost your competitive advantage.
For an alliance to be strategic and successful, it has to be mutually beneficial. Here are some considerations:
Two peas in a pod
Strategic partnerships are effective when both companies complement each other (not adversaries). The potential partner could be in the same market as you but offers a different product or service that supplements your own offerings e.g. if you’re in the business of selling shoes, consider partnering with an accessories provider (belts, jewellery, scarf and the likes).
So think about where your customers go before they buy your product/service, and where they go after they make a purchase. The potential partner could also embody similar company values and modus operandi, making them complementary. Therefore, each partner can focus on its strengths, while the other can cover the areas outside your expertise.
Focus on outcomes
It’s important to know what you can and what you’re prepared to deliver, as well as your expectations from the potential partner before you start exploring opportunities. Approaching a partner without a clear understanding of your objectives can result in their loss of interest before negotiations have even begun (and vice versa).
It helps to ask the potential partner what they’re looking to achieve right up front, and see if it aligns with your objectives. Remember, the value your business brings to a partnership isn’t limited to just your products or services – knowledge is power so the opportunity to share your expertise and experience with them and their clients can be just as valuable.
It takes two to tango
The level of commitment from each partner should be openly discussed as per any relationship. The nature of your business and theirs – including different working tempos, styles and bureaucracies – will likely determine what activities each partner will commit to, to ensure the alliance is effective.
It’s best to be flexible and adaptive, again focusing on the desired outcomes. In addition, the extent to which you share resources and expertise in the partnership will need to be considered so there’s a balance between collaboration and achieving your own business objectives.
Finally, remember that a strategic partnership is an alliance (and not a merger), so the terms of engagement should be mutually beneficial, and one that will open more doors for your business, and theirs.
