In every kind of business, there comes a time when you realize you can’t do everything alone. Even when you have a solid team to support you and adequate cash flows, it’s still possible to reach the limit of what you can do. Rather than bringing on more staff to tackle more projects, forming strategic partnerships can give your company the edge it needs.
Types of strategic partnerships
Although there are many variations in play, strategic partnerships are basically just multiple companies working together towards a common goal – usually increasing market share and profits. The alliance formed between the companies can be an informal arrangement or joint venture, creating a new entity in the process. In some cases, the partners will share in both the financial risks and rewards of the new venture.
Of course, even if you’re not ready to draw up that kind of paperwork just yet, forming strategic partnerships can still work for you.
Why strategic partnerships work
The primary reason strategic partnerships work is because they’re designed so that everyone benefits from them. As long as each party continues to get more out of the arrangement than they would on their own, the partnership stays strong and everyone is willing to continue contributing time and effort to it. Once the balance tips markedly in one direction and seems to stay that way, that’s when many alliances can fail.
An example of a simple strategic partnership might be a start-up printing company that needs to get customers in the door. They could form an alliance where the printing company provides reduced cost or free printed items to a marketing company in exchange for driving new customers to their business. If this printing company only works with paper, it could partner with a tee-shirt printing company to pass customers between them.
In both instances, neither partner is in direct competition, so the alliance works as long as both parties are able to fulfill their side of the arrangement.
Determining if strategic partnerships are right for you
While strategic partnerships wouldn’t always work the same way for businesses the way they do in the example, they’re still worth exploring. When trying to decide what companies would make good strategic partners, consider:
- How you could drive more business to customers or vendors
- What business you’re not getting from customers or vendors
- Where your market share isn’t strong.
Your existing customer base and vendors are the best places to begin looking to build strategic partnerships because they already like you. That said, try not to rule out your competition simply because they’re the competition. If they can put out a higher quality product at a lower price than you can, it may be worth sending them the business for that product in exchange for the customers they can send to your other product lines. Remember, when it comes to forming strategic partnerships, the goal is for everyone to win together, not just do OK alone.