Business relationships and support

How to develop business strategic alliances

In your business journey, you’ll meet people who you’d love to collaborate with, and you’ll be approached by other businesses wanting to partner with you. Before you dive in, here’s a guide for building strategic partnerships that’ll help power up your business.

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Partner up to power up your business

A strategic partnership is an agreement between two or more businesses that is mutually beneficial. Businesses of any size can team up with others to offer services, share costs, swap skills, grow customer bases, or collaborate on projects – which can benefit small businesses in particular.

The benefits of strategic partnerships

A strategic partnership aims to strike the right balance of collaboration and profit. Here are four benefits to get you thinking about what a strategic partnership could do for your business.

Grow your brand and credibility faster

Running a small business can be challenging – but partnering up with larger companies could help take the edge off. 

Young brands need credibility, and forming strategic partnerships with well-established brands can make them look bigger in the eyes of potential customers. For the bigger-name brands, they may up their ‘cool’ factor by partnering with a niche or indie brand that’s making a splash. Gaining a foothold in large or international markets can take years. Forming the right partnership can be a much quicker path to getting exposure in these valuable markets. Similarly, teaming up with businesses that have well-developed supply and distribution channels can open new doors for your business that would otherwise be closed.

Customer convenience

A strategic partnership with the right company can help you offer your customers the convenience of a ‘one-stop shop’. 

For example:

  • If you run a web design company – team up with a developer and offer a package deal. 
  • If you sell wellness retreats – find a health supply company that’s on your wavelength.

Pairing up with a complementary business could also involve shared marketing and customer acquisition costs, and increase that most hallowed of assets – your customer database. 

You can team up to promote each other’s products and services to your respective customers. Just be sure to never share you customer database with another business to comply with the New Zealand Privacy Act.

Sharing of skills and resources

You don’t have to be good at everything – other businesses can step in to fill the gaps. Agree to not compete with similar companies in the same market, but hone your offerings and recommend each other. Do you have expertise in public relations and communications, but you’re not so into numbers? Team up with an accountant and swap skills – at a much lower cost than market rate.

Strategic partnerships also mean you can extend your resources (technical, financial, and so on) at a much faster rate while focusing on your strengths.

Save on costs

You might be tempted at first to invest in the lot – your own office and printing facilities, the latest technology, the edgiest research and development, the fastest transport services. But before you do, ask yourself if a strategic partnership could help you save on costs.

The right partnership can help you keep precious cash resources in the business. You may engage in a form of barter (trading ideas or sharing equipment that doesn’t involve cash). For example, you could:

  • Share the costs of specialised technology (such as a machine or software) that you need for a particular project
  • Share an office space and split utility bills
  • Negotiate supply chain contracts as one team
  • Share research and development costs (often out of reach for small businesses). 

The right partnership could also offer possible tax advantages (always consult an expert to make sure you’re meeting your obligations).

How to get partnerships that power you up

Before you allow yourself to get wooed by a large business, or that like-minded person you met at a conference, think about what you really want from a partnership. Talk to your support team of professionals and get their advice before you sign anything. 

Here are three other key steps you should take.

1. Identify what you have to offer, and what you need

Be as clear as you can about what you want to achieve with a partnership, and the types of companies you want to partner with. Partnerships take many forms, and the perfect fit for you is out there – you just have to know what to look for. Ask yourself:

  • What does our business have to offer other businesses?
  • What kinds of partnerships will benefit our customers?
  • What are we lacking that could be fixed with the right partnership?
  • What brands do we want to align ourselves with? 
  • What companies have values similar to ours?
  • What outcome do we want from the partnership?

2. Go after the partnerships you want

Once you know what you need, don't wait for your phone to ring – be proactive. Make a list of companies or individuals you’d like to partner with. Do some homework to find out what you can about their history partnering with others – in other words, check their references first. If a company is not as credible as it appears, the partnership could damage your credibility.

Once you’re happy with your wish list, come up with an approach that’s unique to each individual or company, and will persuade them to agree with your proposal. 

For this part, you might want to perfect your elevator pitch.

3. Have an agreement

Before agreeing to become partners indefinitely, consider kicking things off a with a temporary agreement. You might agree to be partners for a short fixed term, or you might agree to partner up on a project. 

Get the terms of the agreement down on paper (this could be a simple one-pager that captures all the main points). Clarify the objectives and the expected benefits, and make sure you agree on the fundamentals. For example:

  • How you’ll define liability and responsibilities of each party
  • How you’ll make decisions that affect both of you
  • How you’ll resolve conflict if it occurs
  • When you’ll reassess and evaluate how it’s going.

You’ll also want to protect your business by clarifying who’ll end up owning what (such as intellectual property, physical property, customer databases, and marketing collateral). It’s a good idea to get legal advice for this.

Base your partnership on open, honest communication, and set expectations and boundaries from the start. To make it work, both sides will need to dedicate time to make the partnership a success.

Networking for success

It takes a village to raise a child and equally you need a great network to start, run or grow a business. This video will help you with some starters on where to look for people to support you in business and how to engage with them when you find them.

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