The value of partnerships in growing your business

June 28, 2019 ​​6 min read

 
It might seem counter-intuitive, but partnering with other businesses can make yours stronger and more competitive.  

Many business owners are fiercely competitive and independent-minded. But sometimes, entering into strategic partnerships or alliances with other local businesses is a path to becoming even stronger and more competitive. Collaboration can open doors to growth and success that would be impossible to achieve on your own.

The potential benefits of partnership can include: 

  • sharing expertise
  • Accessing new marketing channels, and new markets and customers
  • Accessing wider distribution networks
  • Accessing new technology
  • Achieving better economies of scale, and saving money, by leveraging purchasing power to get lower prices from suppliers

Big businesses often pursue strategic alliances. Think about the Starbucks outlet inside Chapters-Indigo stores, or the ability to sign up for Telus cellular plan in London Drugs, Walmart and Best Buy. If you’ve flown with Air Canada, you may have benefitted from its membership in Star Alliance, a global partnership of dozens of airlines which share airport terminals and operate a travel rewards program. 

There are many examples of strategic partnerships between locally based businesses. An accountant and an executive coach collaborate by referring business to each other. A renovation firm partners with a landscaping company; they share project estimating and back-office functions, along with materials purchasing and delivery. An artisan soap maker partners with a hotel amenities distributor to market a customized product line. The soap company gains access to an established distribution network, allowing it to expand production and increase its revenue, while the distributor builds sales by adding high-quality, customized products to its lineup.

As those examples illustrate, successful partnerships are “win-win” scenarios. Beyond that, there is no single formula or model. Potential alliances could involve referrals, co-marketing, outsourcing, white-labelling, licensing, and even joint ventures

Partnerships are often generated by entrepreneurs getting together and doing what they do best: recognizing an opportunity and taking advantage of it with strategic thinking and creative problem-solving. 

You’re unlikely to partner with a direct competitor. Instead, look among your local network for businesses whose target markets include your ideal customers, and whose products or services are complimentary to your own. Can you see a way for each business to provide something of value to the other? And by working together will you be able to provide more value to your customers? If the answer is yes to both those questions, you may have an opportunity worth exploring.

Here are some additional questions to guide that exploration with a prospective partner:

  • Are your brands and your business models compatible?
  • Do you have good communication and shared attitudes and values? In other words, can you get along?
  • Do you have a shared vision of the purpose and the desired outcomes of the partnership? Have you discussed the risks?
  • Is there a clear understanding of exactly what each of you will contribute and how much each of you will invest?
  • How long will the partnership last?
  • How will you measure and evaluate success?
  • Does it make sense to use a contract to define the relationship, roles, responsibilities and timelines? A written agreement can anticipate contingencies and help avoid misunderstandings.

By thoughtfully working through those questions together, you and your partner stand a good chance of success.

Other topics to explore:

 Expanding your business — 3 tips to growing locally
 3 ways to manage risk when starting small business
 Turn your business debt into an asset
 Where to find financing for your business

Connect with Coastal Community


Let us help you get started