Global Edge defines strategic alliance “cooperation between the two companies aims to achieve a strategic goal.” Traditionally taking place strategic alliances between large companies and include formal arrangements such as “international licensing, management contracts and joint ventures” – but more and more small businesses are banding together in informal ways to form strategic alliances of their own. What are some of the benefits of forming small business strategic alliances? As a small business owner, how can you pick to start conversations with potential allies and what should you look for in a strategic partner?
strategic partnerships provide an opportunity to pool and share resources. Many small businesses need to operate within a certain capital resource framework – both from an economic and intellectual standpoint. Lack of money and certain types of skills make it difficult to build a small business
“alliances are extremely useful to small business owners – Many times small business owners have limited resources, one of the man power. Another is money, “says Ross Karp, president of the chapter and founder of My Network Group Inc. in New York City. “By forming a cooperation you need a partner to bounce ideas off of to help go after customers who you are marketing to. Karp goes on to say that strategic alliances help small businesses develop or access different skill sets . ” We all have different skill sets that can compliment each other. By working to our strengths and help our weaknesses we are maximizing our time and energy. “
King Eric, VP Business Services at Delta Community Credit Union in Atlanta, Georgia, also believes that the right type of strategic alliance can benefit small business” Strategic alliances can be very useful -. especially if cooperation is based on free core competencies and culture. The concept of cost sharing, especially in the start up mode, can be a great balance sheet management tool. “
Small businesses can also use strategic alliances expand their service offerings. To establish strategic alliances with (like-minded) vendors who share the same target market and provide products / services that compliment brands can help small businesses prosper your. It is a little my business, I have used strategic alliances to offer customers access to a wide variety of marketing related service providers -. must channel to “best of breed” talent for my clients has helped my small business develop a compelling value proposition
In addition to sharing resources and increasing supply, the strategic partnership existing small businesses with a number of other benefits. “Companies that are close geographically (and share a target market) can combine resources to double their efforts ads, “says Hilary Hamblin, Independent Marketing and Advertising Professional in Florence, Alabama. “They can share information database and mail information to two or more mailing lists instead of one. Companies can refer customers to other companies in the Community, and even get a discount for bulk purchases of certain products.” Guy Timberlake, Chief Visionary and CEO for The American Small Business Coalition (The ASBC) in Washington, DC, adds “gaining access to competitive intelligence” and access to potential customers as two more potential benefits associated with forming small business strategic alliances.
Marci Tomascak, independent Public Relations and Communications Professional of New York City, shares a story that describes another benefit – the opportunity to participate in co-marketing programs. “I went to the well-known bridal shop to pick up the store to investigate the purpose. While I was there the” greeters “at the front of the store spoke to me in a little and we got chummy. Before I went to the store, shop hand, they had given me insight razor. It was a great alliance where there is no competition. Not only does the bridal store have a great give away prospective brides and bridal parties but the razor company gets people to try their product. “
How to Get Started
How do you start the process of creating a strategic partnership? In my experience, the best way to reach potential strategic partners is to start networking. I like to investigate other small businesses in the local market in my area and try to find products or services that compliment my brand and provide solutions for my clients. As a next step, I usually send an email introduction outlining how our small business could benefit from working together. What really works for me is a casual meeting over coffee – I meet people face to face in a non-business setting is a great way to quickly find out if you can envision working together Ross
. Karp agrees that forming alliances with network works best. He also believes that it is important to understand your target market and to determine what services (offered by potential allies) compliment the product / service offering. “For example, a real estate broker could team up with a mortgage broker, attorney, insurance planners, etc.” says Karp.
Things to Consider Before forming an alliance
An important aspect of any business arrangement, it formal or casual, is the performance of due diligence. “As the level of contribution to effectively and efficiently pursue new business, the same research and examination should be leveraged when trying to develop cooperation,” says Guy Timberlake of The ASBC. “Simply put, consider the business case to develop and take advantage of such a relationship.”
King Eric also suggests looking to see “how collaboration affects the combined market share. Is overlapping target groups? Is overlapping interests? Is one part of the Community stand to benefit more than the other?”