How to use Strategic Partnerships to Grow your Small Business
Throughout history, humans have used strategic alliances to grow and expand their dominion. Irrespective of the motivations, whether political, financial, or social, alliances have been a constant part of human history.
Today, partnerships, mergers, and takeovers are a regular part of doing business and engaging in commerce. For a lot of businesses, a partnership is their only option to take it to the next level. Whether it’s sponsorships, co-branded products, or exclusivity deals, partnerships and alliances are as inevitable as acquiring funding.
But what if you own a small business? Is partnership the right option to grow your small business? Sure it is, you just have to do your research and know what you’re getting into.
In this article, we’ll help you understand how and why you should use strategic partnerships to grow your small business. Let’s get into it!
TABLE OF CONTENTS
- Advantages of Small Business Partnerships
- How can you identify potential Business Partnerships?
- How can you develop Strategic Partnerships?
- Final Words
Advantages of Small Business Partnerships
Strategic partnerships can be advantageous for all kinds of businesses, from fledgling startups to established businesses seeking growth. Wondering how your business can benefit from partnering with other brands and businesses? Continue reading to find out!
Share resources and Expertise
More often than not business owners are not able to scale their businesses due to lack of knowledge, experience, or resources. Knowledge can be gained fairly quickly, but experience comes with time. And resources are difficult to come by without the initial investment. Now, if you lack the capital needed to get the experience, resources, and knowledge required to grow your business, it’s not the end of the road for you. When it comes to business, where there’s a will there’s a way.
Forming partnerships is a cost-effective method to explore new opportunities without risking failure simply due to a lack of experience or resources. By forming partnerships with the right brand and businesses, you can benefit from the knowledge and experience of your partners. It really is a great way for businesses to grow together and scale their operations.
Reach new markets and customers
It can be quite difficult for smaller businesses to grow their customer base. They have to identify ideal target customers, establish brand credibility, and showcase value over their competitors. But, you, as a business owner, shouldn’t think that there is only one way of reaching out to new customers. In fact, there are innumerable ways in which you can expand to newer markets and customers.
One such simple way is to form partnerships with the right businesses. With Partnerships, you get direct access to an already established customer base. The other brand vouches for you in the process and provides direct exposure that wouldn’t be possible otherwise. Depending on your partner(s), this could be an expansion of the market you already serve or an entirely new complementary audience.
Improve your Reputation
When you partner with other brands, you essentially give them your seal of approval. You vouch for their mission, products, and actions to your customers, employees, and suppliers. Fortunately, this works both ways, and your partner brand simultaneously vouches for you.
This provides an amazing opportunity to increase awareness and a positive reputation for your business. In this way, you not only create awareness amongst customers but other businesses, vendors, and professionals too.
But, you must be cautious as this can turn out to be a double-edged sword. If the business you partner with has a poor public persona, it can turn things the other way round. Partnering with a business that has a poor public persona can tarnish your brand image as well. So, you must be very cautious of who you partner with, in your business dealings.
Increase your Revenue
There’s a good chance that a partnership with a good brand will not only improve your reputation and help you access new markets but also help you increase your revenue. This can be the result of your expanded customer base, shared resources and costs, among other factors.
Increasing your revenue might not be your primary goal. But, it should be one of the reasons for approaching strategic partnerships. This can help ensure that your partnership provides the necessary return on investment to justify the effort and use of resources.
How can you identify potential Business Partnerships?
Identifying and forming partnerships is much like pitching your business to investors. You must be prepared to identify partners that make the most sense for your business and pitch a partnership that is enticing to your potential partner. Let’s take a look at a few approaches to partnerships that you can take:
Similar or Shared Company Values
We hope you remember to avoid partnering with businesses with abominable practices or a negative public image. You must always look for partners with similar values.
Non-profits have to constantly take this into consideration when vetting donors. This can also really help for-profit businesses find potential partners.
You’re more likely to work well with your partner(s) if you share a similar mission, company goals, or internal HR practices. If these elements are common between your business and your potential partner then it could make the initial pitch that much easier for you.
Complementary Products and Services
While identifying potential business partnerships, you must understand whether your products and services could complement that of your potential partner. Now think about your customers’ interests and where the two overlap.
So, let’s say that your business manufactures aerated drinks and non-alcoholic beverages. Now, as a beverage manufacturer, it’d make sense for you to partner with a pizza joint. But it wouldn’t really be smart to partner with a car tire replacement shop.
We hope you understand what we mean when we mean that both your products or services should be complementary and overlap with customers’ interests.
Builds up your Network
While looking for potential partners, sometimes the best thing to do is expand your network. Focus on brands and companies outside of your industry or vertical. Be on the lookout for opportunities to create complementary products. Your goal behind creating complementary products is to expand your customer base and business contacts.
Gives you some Competitive spirit
If you work within an extremely competitive industry with established players, partnering up can help you take on the competition. You should look for smaller businesses to partner with and focus on pooling resources that can increase your ability to innovate and market. Alternatively, you can also look to partner with well-known brands outside your space that can provide unique benefits that your competitors don’t have.
How can you develop Strategic Partnerships?
After identifying a potential co-branding or partnership opportunity, you have to get to work on actually developing that partnership. Follow the steps mentioned below to ensure you’re prepared to successfully manage it.
1. Understand the Requirements and Deliverables
Both parties must determine their requirements and clarify what each side needs to deliver beforehand. Make sure you understand your partner’s goals and how the partnership fits into their business strategies before getting on-board. To start your partnership on the right foot, focus on the following elements:
- Transparency: During negotiations, be as transparent as possible. Make sure that each side understands the goals and aspirations of the other side. This will set the precedent to maintain that same level of trust, openness, and visibility throughout the partnership.
- Established KPIs: Discuss Key Performance Indicators (KPIs) and measurements of success up-front. Make sure that the definition of success is similar for both parties and try to match them as far as possible. If you have separate goals that can’t be measured exactly the same way, then you can set additional internal goals to make sure you and your partner both deliver.
- Be flexible: Not every plan works out the way you plan. Not all projects hit the pre-established milestones right on time. Setbacks can come out of nowhere and certainty is not guaranteed. This is especially true when you throw two separate organizations into the mix. You must show a willingness to reset timelines and revisit goals when problems arise.
2. Set the Terms of Partnership
You can think of this as the nuts and bolts of your partnership. Set comprehensive terms and consider every possible condition, from the beginning.
Plan and discuss your investment costs, points of contact, profit sharing, branding guidelines, responsibilities, and any other necessary requirements. Don’t take the paperwork lightly. Ensure that you consider every possibility to make the partnership successful and foolproof.
3. Manage Relationships
Sometimes, you’ll have to nurture relationships to work together successfully. Most likely, you’ll need to facilitate joint decision making. This is especially true if the contract does not lay down everything that needs to happen.
Establish a chain of communication and keep it clear and minimal. Ensure that the key individuals who’ll work together can trust each other. You can also set up communications channels for the individuals working between both companies to keep everyone informed.
4. Maintain a flexible Partnership
To maintain a good partnership, it is important to explore new opportunities. Try and be flexible, especially in a long-term partnership. Work with your business partners to explore beyond the parameters of your current collaboration. This can help make sure that both of you are actively reaping the benefits rather than falling behind.
5. Get your Team involved
If a partnership is negotiated between two leaders, it is unfair and seldom a good idea to expect team members to follow. Engaging the entire team is vital for success. This is especially true if they are expected to work with a brand new team. Even if you have not involved the team members in the direct negotiation, getting to know different players and defining their role is important to ensure a successful partnership.
Partnerships are always difficult to maintain. While some are extremely successful from the start, others need a bit of a push. To be successful from the start, you need to trust, collaborate, communicate, and comply with each other. If both partners are open to new ideas and creative avenues, it will give you the edge that you need to grow and succeed.
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