Human history has been full of strategic alliances. There are many types of strategic partnerships: personal and business, political or otherwise. Partnerships are an integral part of the business. Many companies see partnerships as essential as funding.
What if your business is a small one? Is it worth partnering with other businesses? Yes, it is possible. However, you will need to do some planning and research before doing so.
What are the benefits of small-business partnerships?
Strategic partnerships are a great way to grow your business, whether you’re a startup or an established company. Here are some benefits to partner with another business or brand.
Reach new customers
Smaller businesses may have a difficult time growing their customer base. It can be difficult for smaller firms to find the right customers, build credibility, and show value over their competitors. What if all this could be done in one go?
Strategic partnerships allow you to have direct access to an established customer base. Partnering with another brand will vouch for you and provide direct exposure that isn’t possible elsewhere. In addition, it could open up new markets or expand the market you currently serve depending on who you partner with.
Use your expertise and resources to share
Most likely, you’d hire or outsource an expert to help with areas of your business that you don’t have any experience in. Strategic partnerships with other companies are another way to fill this gap in expertise. It is a cost-effective way to explore new possibilities without putting yourself at risk of failure due to a lack of experience or resources.
For example, take the original partnership between Pixar and Disney. Pixar was at the forefront of storytelling and 3-D animation, but they had no idea about the movie industry or distribution channels. Disney was an icon in the animation industry, but it struggled to produce quality films under new management.
Pixar was able to partner with experts and have the financial backing to distribute their works. As a result, Disney was again associated with innovative animation without putting themselves at risk of failure.
Your reputation will grow
Your endorsement of other brands is a partnership. You vouch for the mission, products, and actions of your suppliers, customers, employees, as well as their employees. It is a two-way street, and your brand partner simultaneously vouches for you.
It is an excellent opportunity to increase awareness and build a positive reputation for your business. Customers, as well as other companies, vendors, professionals, can benefit from this partnership. However, this can prove to be a double-edged weapon if the business partner has a poor public image. So be careful about who you associate with.
There’s a good chance you will increase your revenue if you can take advantage of any of these benefits. It could be achieved by expanding your customer base, sharing costs and resources, or launching a joint product.
Even if revenue is not your primary goal, it should be one reason to approach strategic partnerships. It can ensure that your collaboration delivers the return on investment necessary to make it worthwhile.
How to find potential business partners
Only knowing the benefits of partnership can take you far. You want to grow your business, increase revenue and reach new customers. But how do you go about doing it? Who will you partner with to do this?
You must be ready to pitch your business to investors and find the right partners for your business. These are some options for partnerships.
Complementary products or services
What brands, businesses, or products might complement your business offerings, and what could they be? Think about the interests of your customers and see where they overlap. You’re likely to find an opportunity.
A local brewery that offers a unique craft beer. A partnership between a PC hardware manufacturer and a video game company to develop a branded GPU unit. There are many new examples announced daily, so you don’t have to look too far.
Look for a gap in your business that you can fill or a way to increase both of your offerings through collaboration. It can be enough to spark discussions about a partnership.
Similar company values
Partnerships can either improve or harm your reputation, as we have already said. It may seem obvious to avoid working with companies with abhorrent or damaging public images, but it might be harder to find partners who share your values.
Nonprofits must consider this when screening donors. It can also be a way for for-profit companies to find potential partners. You’re more likely than not to get along if you have similar goals, company values, or HR practices. These elements can make it easier to pitch your idea.
Your network is open to you
Business communities are like high school cliques. These communities are supportive and can be a great place to meet people you enjoy and share your values. However, they may have a limited scope. Therefore, it is essential to look for potential partners that have a broad network.
It would help if you focused on companies that are not in your industry. It would help if you still looked for complimentary products but did not expand your customer base or business contacts.
This makes you more competitive
Partnering up with other businesses can be a great way to compete in a highly competitive market. Partner with smaller companies and concentrate on pooling resources that will help you innovate and market. You might also consider partnering with well-known brands outside of your industry, as they may offer unique benefits that your competitors don’t.
How to build strategic partnerships
Once you have identified a partnership or co-branding opportunity, it is time to start developing the partnership. These are the steps to take to make sure you can successfully manage your collaboration.
1. Understand the deliverables
It is essential to clearly define your needs and what each party must deliver upfront. Before you sign on, it is necessary to understand your partner’s goals and how the partnership fits in with their business strategies. To get your affiliation off to a good start, you should focus on these elements:
Transparency is key
During negotiations, be as transparent as you can. It is essential to understand the goals of your partner and theirs. It sets the tone for a partnership that is transparent and trustworthy.
The same methods of success can be used
Talk about KPIs (Key Performance indicators) and measures of success up front. Please make sure you are on the same page about what success means for each other and work together to achieve them. To ensure that you and your partner achieve the same goals, you can set internal goals.
Reset your goals and timelines if necessary
Every plan is not able to meet pre-established milestones on time. There are always setbacks and uncertainty, especially when there are two organizations involved. Demonstrate a willingness and ability to adjust timelines and revisit goals when necessary.
To ensure that your partner doesn’t take advantage of your flexibility, ensure you have the minimum requirements in place. A partnership that isn’t profitable can quickly become a losing battle or a waste of time.
2. Set the terms of your deal
It is the foundation of your partnership. Likely, something will not fit properly. From the beginning, you must agree to terms and take into account all possible conditions.
You should define your investment costs, points, contact information, profit sharing, branding guidelines, and responsibilities. Do not skimp on paperwork. Make sure to consider all options to make your partnership successful and flawless.
3. Manage relationships with ease
You may need to build relationships to make the deal work. You will need to fill in the gaps and answer any new questions during the partnership. In addition, you will likely need to facilitate joint decision-making, mainly if the contract doesn’t cover everything.
Keep the communication lines open and short. Make sure you identify the key people who need to work together and that they are trustworthy. Then, to keep everyone informed, create communication channels for employees working in both companies.
4. Flexibility is key to a successful partnership
It is vital to look at new possibilities to survive a partnership. One method or investment may seem the best initially, but it changes after a few weeks, months, or even years. The competition releases new products, leaders change, or a setback that opens up new opportunities.
Flexibility is critical, especially in long-term partnerships. Your business partners should work together to move beyond their current collaboration. It will ensure that both of you are actively reaping the rewards and not falling behind.
5. Get the whole team involved
It’s not a good idea for leaders to announce a partnership and expect the team to follow. It is essential to engage the whole team, especially when they are working with a new group. Even if they aren’t involved in direct negotiations, getting to know each other and defining their roles is necessary. It will help speed up the launch of the partnership.
When approaching small business partners, be focused on growth
Although partnerships can be challenging to maintain, some are very successful. Others need a little help. You need to trust, cooperate, communicate, and be compliant with one another to achieve the latter. However, it will give you the edge you need to grow if both of your partners are open to new ideas.
Disclaimer. The opinions and views expressed in this article are the authors Judge Napolitano.