Using Strategic Partners to Expand and Grow

Using Strategic Partners to Expand and Grow

How many of you think you don’t have enough business?  Guess what, there are others among you that have said they have too much business!  These two predicaments are an excellent starting point to show the power of strategic partnering.

A strategic partnership is a formal agreement between entities to share or exchange resources.  Notice I said formal.  This means a written document with expectations spelled out for both parties.  Let’s see how we can apply this concept to our original problem.
Our first business complained they did not have enough business.  If they completed a capacity analysis (see our article titled “Can You Achieve Your Goals This Year?” ) and found out they have a problem with sales and/or marketing, then they would be correct.  So, that means they have excess capacity.
The second company has too much business.  Some may ask how is that a bad thing?  Actually, this is worse than the first scenario.  If you cannot deliver what you promise, you lose your reputation!  This is the most important asset in your business.  Without your reputation you have nothing.
The problem our second company is suffering from — less than needed capacity.  Do you see a synergy between these two companies?  This is an excellent place for strategic partnership.  The company with too much work gets extra capacity to deliver their service or product.  While the first company gets the work they currently lack to keep their cash flowing.
There are pitfalls to strategic partnerships too.  This is why I strongly recommend documenting your agreement in writing before you commence.  Often, people become complacent in strategic partnerships.  They expect business to come their way because of the agreement.  You cannot run your business that way.  Do not expect business from a strategic partnership unless both parties agree that is how the relationship will work.
Another major pitfall of strategic partnerships is when one party takes advantage of the other by exploiting inequities in the arrangement.  When someone is shorted in a relationship, problems are not far behind.  Just approach the strategic partnership as you would approach a relationship with your customers.  Be honest and ethical, and there should be few if any problems.
Strategic partnering is a powerful tool to get the resources you need without a large investment of capital upfront.  With the right relationships strategic partnerships can make your business even stronger, because it brings new views and idea to your business from a different group of perspectives.  Done right, with mutually beneficial objectives and a written agreement of how the relationship will work, there is little if any downside to strategic partnering.  So, take these ideas here and look for ways that you can use strategic partnering as a way to expand and grow your business.

Share your experience with using strategic partners as a growth strategy.

Note:  Stay posted to DE, Inc. for our next Business Accelerator Training program – “Maximize Profits Using Strategic Alliances

Copyright ©2011 Dino Eliadis

About Dino Eliadis

Dino Eliadis has over 25 years experience in creating and leading high performance teams and organizations. His talents spans many different industries where he focuses on assisting small business owners to make measurable improvements in overall business performance thus increasing their “book value” by Tuning the Revenue Engine. The result: increased productivity and improved revenue growth, leading to maximized profits.

4 thoughts on “Using Strategic Partners to Expand and Grow

  1. Larry Dunleavy • As a bootstrapped company we’ve had several formal and informal partnerships that have helped us make progress where otherwise we could not (those interested can see various press releases at http://www.modelithics.com/news.asp ) . The most recent is described in our latest Press Release about our relationship with Agilent Technologies. Through this, we are being provided a long-term loan to equipment valued at over $300K to help promote and participate a new technology thrust that they are interested in seeing a 3rd party company like ours help them promote.

    http://www.modelithics.com/paper/1403.pdf

    As you say- the key is win-win. Our experience with other partnerships suggests those that work best have champions of the relationship for both companies that make sure good communications are maintained and to ensure that adjustments and recommittments to follow-through are made along the way on items like joint papers, referrals and so on.

    1 hour ago

    • Larry,

      Thanks for your comment and “real world” contribution here. Your points are dead-on when you talk about promotional opportunities for all parties and the key being “win-win”. These are 2 key facotrs that we provide in our training programs and when we consult with companies to establish this kind of relationship. Most people only see these relationships as “you do this and I’ll do that” and miss out on all the intangible benefits.

      Thanks again for your input and good luck with your future strategic alliance, as I can see you understand the true value and benefit of this kind of business relationship.

      – Dino Eliadis

  2. I ship many items internationally. I recently approached a big international courier company, think FedEx but a lot more entrepreneurial in their services and I asked if they would like to “develop a relationship that goes beyond customer/courier company” . I have yet to hear from them, so far I have only contacted the COO who is based overseas the rest of the executives are overseas as well. The local office that I use doesn’t seem to have anyone that can call the shots on an acquisition, merger, alliance, etc. etc. call it what you will. I am also hesitant to call the local office because I am afraid someone there might just take my idea and either present it as their own or simply adapt it into the current services/products they offer.

    About my situation. I mainly use this shipping company because they gave me, by far, the best rates. However this can change at anytime, as we all know. The items we sell are a commodity and we have many competitors that also sell the same items internationally. My competitors have the same or better rates from DHL, Fedex, UPS, I have approached these different companies but they made it clear that they can’t do any better, I would have to do 1000% more business to get the same rates with the above mentioned companies. My courier company that I approached also has a bigger presence in our main market overseas, so I know that being related to them in a closer way would increase my sales and our company image in my customers mind. Since shipping is the biggest cost, besides the item itself for us and our customers, I also believe that creating an alliance or partnership with them would allow me to secure these rates or even better ones in the future.

    I am afraid of a few things. Main thing being, my business has a low entry barrier so I am afraid they would just take my idea or maybe create a small partnership for a year or two, understand the entire idea and just hire someone at $12 an hour to do the same thing.

    Am I justified in my fear? If so, should I not take the risk and remain a tiny business. On the other hand if this relationship is created, I know for a fact that my sales will SOAR. However as a tiny business with a low entry barrier service and product, how can I approach this big company to develop a long relationship?

    • Said,

      Thank you for your comment and I understand your point as I frequently see this situation with entreperneurs. One thing you must understand is that the vendor you are trying to create a strategic alliance with has a different set of objective than yours. So, you must understand their objectives first to see how they align with your own. From here it is much easier to have a dialog that is mutually beneficial. Without mutual benefit a strategic alliance is doomed before it is started.

      If you are worried about someone stealing your idea you must first ask, is it really a new idea? Do your market research to find if others are already doing what you want to do. If they are copy what they’ve already done or determine how to do it better. If nobody else is doing it the you need to ask yourself WHY? There may be a reason people are not alread doing it, including the reasons you’ve stated here it’s too difficult or too costly. If you really have something unique then as for a confidentiality agreement be signed before you discuss it with the potential strategic partner. If they are not willing to do so, this should tell you something about them. Would you really want to do business with someone that is not willing to protect your ideas!?

      Thanks again for your comment. I hope this has been helpful. If you need more assistance feel fre to contact me directly at dino@dinoeliadis.com.

      – Dino Eiadis


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