Why enter into a business alliance? The main motivations include cost reduction, the improvement of service or capture more customers. Here are 5 kinds of business alliances that business-oriented minds need to know about:
- Solution-Specific business alliances are formed when companies agree to jointly develop and sell a solution to a specific marketplace.
- Geographic-Specific business alliances are formed when companies agree to market or co-brand their products and services together in a specific geographic area.
- Investment business alliances are formed when companies agree to combine their funds for general mutual investments.
- Sales business alliances are formed when two or more companies agree to go to market together to sell products and services that align with the needs of all the companies in alliances.
- Joint ventures are usually formed when two or more companies agree to take on economic activities together.
When seeking a business partner, a company has something you need, or resources you couldn’t access beforehand. Note you must have something that company needs as well. All parties of a business alliance must benefit from the investment of time used. You must be selective when you choose your business partners. Learn to vet your partners well.
Business alliances are formed because all companies involved want to become more profitable. Business alliances are not formed as one-shot short-term solutions. Companies must think long-term, minimum of 3 to 5+ years. Companies investigate the reputations of each other to make sure that they are making the right choice in selecting business partners.
Alliances define and determine the big picture goals. Is the forming of an alliance worth the time of all companies involved? The old saying “Time equals money” rings true. If companies are wasting time with each other, money is wasted. Proper scheduling and maintaining efforts are relevant to all alliance members.
For business alliances, knowing the market is critical. Define your customer’s demographics. What are the values and attitudes of your customer? This is known as the psychographics. Do all partners service the same customers’ profiles?
Here is an essential question all alliances need to address. What is the decision-making process? It is important to note how each company separately handles this process. Obtaining this information allows the alliance to determine how companies handle this process. This joint decision-making process must have an efficient flow. Business partners must regularly meet with each other. It would be wise and prudent to have orientation meetings for the rank and file as soon as possible after forming the business alliance.
Everybody needs to be on board at meetings. Having representatives from each department goes a long way in determining which projects get off the ground under the alliance’s umbrella. After all business requirements are defined, then can be brought in to finalize the agreement.
During any process the alliance undertakes, companies must avoid apathy, negativity and the lack of passion for the alliance. The champions drive the passionate.
Business alliances should avoid power struggles. Miscommunication or dysfunctional trends indicate internal issues. When companies collaborate, they can’t immediately break apart upon clashes. All businesses are goal-oriented and it’s important that business alliances have their goals properly aligned with each other. Create a dashboard to track successes and failures.
Partners in business alliances range from local and regional to national and global depending on how big you want your business venture to grow. Is the alliance right for your company? Can you survive successful alliances?
Business alliances generate new sources of revenue. Getting there isn’t fast, but results can be spectacular. Make them happen. If you need help making it happen, let us help.