As a small business owner, you want to do everything you can to help your business be successful. But in the early days of building a business, time and money are often in short supply.
That’s why you might consider forming a strategic partnership with another business. A strategic partnership is one of the best ways to combine your resources for future growth. It can help you reach a wider audience and access tools and resources you wouldn’t have otherwise.
But what is a strategic partnership, and how can forming one help your business grow? That’s exactly what this article will set out to explain.
What is a strategic business partnership?
In a strategic partnership, two businesses agree to share their resources to achieve further growth and mutual success. For instance, you might partner with another company in your industry to reach a new target market.
Strategic partnerships are beneficial for companies of all sizes, but they can be extremely helpful for small businesses. That’s because a strategic partnership can be a key growth strategy that allows you to compete with larger businesses.
What are the three types of strategic partnerships?
Joint venture: In a joint venture, two companies combine their resources to accomplish a specific objective. Each company is responsible for the costs and profits that come from the venture. However, they remain two separate business entities.
Equity strategic alliance: In an equity strategic alliance, one company purchases equity in another company. Or sometimes, both companies will buy equity in the other company.
Non-equity strategic alliance: In a non-equity strategic alliance, two or more companies sign a contract to combine their resources. But they don’t create a separate entity or share any equity.
What makes a good strategic partnership?
Just like you spent time thinking about your ideal customer, it’s also a good idea to spend some time thinking about your ideal business partnership.
One of the most important things to look for is that both companies can offer something of unique value to the other. If the relationship is too one-sided, it’s unlikely to work long-term.
In general, it’s a good idea to partner with companies that aren’t your direct competitors. A good strategic partner will add value to your customers without directly competing with your products or services.
And both companies need to be excited about the partnership. Again, if one business receives significantly more value than the other, the partnership will most likely fall apart.
How do you create a strategic partnership?
Creating a strategic partnership is a great way to expand your customer base, leverage additional resources, and grow your revenue. But you want to make sure you go about it in the right way.
Don’t rush the process
Anytime you’re entering into a new strategic partnership, it’s essential to set a strong foundation. This is especially important when each company has a significant financial stake in the partnership.
Take some time to discuss your company culture, communication style, and expectations. Don’t just assume that everyone involved is on the same page — take the time to think through how you’ll interact and collaborate.
Doing this will give your partnership the best chance of being successful. It can help to create a written vision for how you’ll work together and what you plan to accomplish.
Maintain strong communication
Even the strongest business relationship can erode due to poor communication. One of the best ways to avoid this is by scheduling regular meetings to talk about the business. Not only will this give your partnership the best chance of success, but it will also help you build trust on both sides.
And each business will bring different skill sets and resources to the table. So if possible, try to let both sides focus on what they do best. For instance, one company may excel at sales marketing while the other may be better at forecasting and budgeting.
And finally, invest in the tools and processes that will help both businesses work together effectively. The right resources can help you bridge the occasional communication gap.
Take time to reassess
Relationships change and evolve, and strategic business partnerships are no different. That’s why it’s a good idea to regularly reassess where you’re at and if the partnership is still beneficial for both sides.
Are your priorities still aligned, and are both companies still focused on the end goal? These kinds of conversations can be uncomfortable, but they will help you avoid bigger problems in the long run.