International edge defines a strategic alliance as a “collaborative settlement between companies designed to acquire some strategic intention.” historically, strategic alliances take region among large companies and embody formal arrangements along with “international licensing agreements, management contracts, and joint ventures” – however, an increasing number of small corporations are banding together in much less formal methods to shape strategic partnerships of their very own. What are a number of the benefits of forming small enterprise strategic alliances? As a small business owner, how will you reach out to start conversations with ability allies and what must you look for in a strategic companion?
Strategic alliances provide a possibility to pool and percentage resources. Many small corporations should operate within a restricted capital useful resource framework – each from a financial and highbrow point of view. Shortages of cash and sure styles of skills make it difficult to build your small business.
“Strategic alliances are extremely useful to small business proprietors – in many instances small commercial enterprise owners have constrained sources, one of these is man electricity; some other is money,” says Ross Karp, bankruptcy President and founder of My Networking organization Inc. In new york town. “by using forming a strategic alliance you’ve got companions to dance ideas off of to assist cross after the customers that you are advertising and marketing to. Karp is going on to say that strategic alliances help small groups increase or benefit get admission to distinctive ability sets. “we all have special ability units which can praise every other. Via running to our strengths and having help with our weaknesses we’re maximizing our time and energies.”
Eric King, vice chairman of business services at Delta network credit score Union in Atlanta, Georgia, additionally feels that the proper form of strategic alliance can advantage a small enterprise. “Strategic alliances may be pretty beneficial – specifically if the partnerships are based on complementary core competencies and cultures. The concept of value sharing, especially in start-up mode, can be a splendid stability sheet management device.”
Extended provider providing
Small companies also can use strategic alliances to enlarge their provider supplying. Organizing strategic alliances with (well suited) providers that percentage the identical goal marketplace and offer merchandise/services that compliment your emblem can assist your small enterprise to prosper. Inside the case of my small commercial enterprise, I’ve used strategic partnerships to provide clients get right of entry to an extensive type of advertising associated carrier vendors – becoming a conduit to “fine of breed” expertise for my clients has helped my small commercial enterprise expand a compelling fee proposition
In addition to sharing resources and expanded services, strategic alliances present small businesses with a number of other benefits. “Businesses that are close geographically (and share a target market) can combine resources to double their advertising efforts,” says Hilary Hamblin, an Independent Marketing and Advertising Professional in Florence, Alabama. “They can share database information and mail information to two or more mailing lists instead of one. Businesses can refer clients to other businesses in the alliance and even get discounts for bulk purchases on certain products.” Guy Timberlake, Chief Visionary and CEO for The American Small Business Coalition (The ASBC) in Washington, D.C., adds “gaining access to competitive intelligence” and access to prospective customers as two more possible benefits associated with forming small business strategic alliances.
Marci Tomascak, an Independent Public Relations and Communications Professional in New York City, shares a story that highlights another benefit – the opportunity to engage in co-marketing programs. “I went into a well known bridal shop to pick up a catalog for researching purposes. While I was there the “greeters” at the front of the store talked with me for a bit and we got chummy. Before I left the store, catalog in hand, they had also given me an intuition razor. THAT was a great alliance where there is no competition. Not only does the bridal store have a great giveaway for prospective brides and bridal parties but the razor company gets new people to try out their product.”
How to Get Started
How do you start the process of creating strategic alliances? In my experience, the best way to reach out to potential strategic partners is to start networking. I like to research other small businesses in my immediate market area and try to find products or services that compliment my brand and provide solutions for my clients. As a next step, I usually send an email introduction outlining how our small businesses might benefit from working together. What really works for me is a casual meeting over a coffee – I find meeting people face to face in a non-business setting is a great way to quickly find out whether or not you can envision working together.
Ross Karp agrees that forming alliances through networking works best. He also feels it’s important to understand your own target market and to establish what services (offered by potential allies) compliment your product/service offering. “For example, a real estate broker could team up with a mortgage broker, an attorney, insurance planners, etc.,” says Karp.
Things to Consider Prior to Forming an Alliance
An important component of any business arrangement, be it formal or casual, is the performance of due diligence. “Like the level of effort required to effectively and efficiently pursue new business, the same research and scrutiny should be leveraged when seeking to develop partnerships,” says Guy Timberlake of The ASBC. “Simply put, consider the business case for developing and utilizing such a relationship.”
Eric King also suggests looking to see “how the partnership impacts the aggregate market share. Is there overlap in target markets? Is the overlap mutually beneficial? Does one part of the alliance stand to benefit more than the other?”
Mark Smiciklas is a Vancouver Marketing Consultant. His firm, Intersection Consulting, helps small to mid-sized businesses address challenges in the areas of marketing, management, and business development.