What is a business alliance? Are you thinking of starting an alliance? Here
are questions to ask about alliances. Continue reading below to learn more.
What is a business alliance?
According to Chron, a business alliance is a formal business relationship between two or more organizations to make collective business goals.
Are alliances right for your business?
- Yes, if you are trailing behind the market in sales and/or growth.
- Yes, if you are behind technology advances.
- Yes, if a close competitor is breathing down your neck.
What are reasons to form an alliance?
- Increased cash.
- Keep up with changing technology.
- Find possible solutions for tough problems.
- Gain market share.
How to approach possible partners?
- Show what you can do for the likely partner.
- Discuss all the detail of the alliance.
- Build trust by spending time together.
- Express expectations up front.
What are the advantages of having a business alliance?
- Calculated goals.
- Access to new markets.
- Knowledge sharing.
- Economies of scale.
- Test run before a merger.
- Ability to take part in several alliances at the same time.
- Supply of capital.
What are the disadvantages of alliances for business?
- Alliances can disappoint.
- Produce higher costs.
- Lower returns than expected.
- Time management.
How to select a partner?
- Research their financial situation.
- Look into their operations.
- Investigate their market presence.
- Check their product or service quality.
- Do they have the same views on customer and service?
- How do they market their product or service?
- Does your prospective partner share the same interest as you?
What are the different types of alliances?
- Joint ventures
What are the legal considerations?
- Take the time to protect your company from liabilities.
- Make sure you have an exit strategy if alliance does not work out.
Is your brain swimming? Hope so. The goal with this article is to get you to think before you jump into alliances. They prove to be profitable, but can also deadly. Plan ahead and ask questions.
If you already have alliances, can you answer each of these questions for each alliance?
If have questions or need more information, please contact us today!
(Sources: First National, Chron, Entrepreneur, Inc, Small Business Advocate, and HIscox)