You scratch my back, I’ll scratch yours. When you form a strategic alliance with another company, you get the benefits of leveraging an expertise, product, service or asset that isn’t even yours. Yet, they call on the same customers you do.
Big businesses have been reaping the rewards of these relationships for years. Also called a strategic partnership — a contractual alliance between two companies that benefits them both — these mutually-beneficial alliances can offer entrepreneurs a competing edge that helps your bottom line in ways that just weren’t possible before. Examples for good alliances: exploring new paths into brand new markets, creating new sales, securing additional financing, more brainstorming power, or more information about your customers.
Large corporations have used strategic partnerships for years, but they’re not just for the big guys — you too can have access to more resources as a small business. Strategic alliances can level the playing field and help everyone compete more effectively with big companies. Companies can share technology, marketing, product development, advertising, branding, HR, sales and other functions.
Small businesses can form mutually beneficial relationships with vendors, suppliers, credit card companies and banks to provide better service to their customers. Examples include Microsoft and Nokia, who work together on cell phones. American Express has partnered with hundreds of start-ups to diversify their revenue stream. Microsoft and IBM may be perhaps the most famous strategic partnership.
For the small businesses, how do you use these lessons? For a massage studio, create an informal alliance with the acupuncture studio, hair salon or nail shop. These businesses have the same people enjoying their services. In this case, may the four companies can all grow.
When you sell business to business, you can create these partnerships just as easily. My client, who sold human resources outsourcing services, created a referral alliance with a payroll services company, insurance sales representative and a virtual CFO company.
A few more ideas to get you started. You could combine your purchasing power with another company to get a better deal on supplies. Try launching a joint-marketing effort with a business that doesn’t compete in your market. Leverage another company’s user base in exchange for getting first dibs on emerging technology.
Take some time to really think about the networks and relationships you’ve already established, and see if there isn’t some way you can work together with another company towards the same goal: increased revenue. Developing strategic alliances can move your small business forward and give you an edge on the competition that only the Fortune 500 used to enjoy.
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