Building small business partnerships
Joining with other businesses to pursue common goals is growing in popularity as a smart way to increase capability, share resources, costs, and risks. The continued development of digital tools, subcontracting, and the ability to access talent and resources from around the world has made this even easier.
Partnering with other businesses can be formal (a contractual obligation), informal (referring work to each other and verbal agreements), significant (sharing suppliers and long-term customers), or ad hoc (coming together project by project).
The collaboration opportunity
Working with another business shares responsibility and gives your business colleagues to work with, rely on and trust to benefit both businesses. If you do face a crisis and can’t get your business back up and running in a short space of time, knowing you’ve got back-up with other businesses can reassure customers you won’t let them down. Collaborating can help you:
- Access new product/service lines by selling another company’s products, saving you any research and development costs.
- Access new markets by the partner selling your products and services to their customers or distribution channels.
- Develop new product knowledge by tapping into new production methods.
- Block competition by referring business to each business exclusively.
- Reduce costs by sharing resources, staff or gaining volume purchase discounts.
- Enhance capacity to bid on larger contracts by being able to offer wider services or present as a much larger business.
- Strengthen customer relationships by being able to better serve their needs.
- Strengthen supplier relationships by bulk ordering.
- Outsource production.
- License the intellectual property of a partner to use in your business, or you license your intellectual property to them.
- Speed up technology transfer.
- Access new business models and ways of selling.
Making the best use of available skills
Collaboration allows multiple individuals to participate in the completion of a task at hand, which makes it more likely that the right talent is available at the right time. With collaboration, tasks are completed more efficiently, leaving more time for a staff to concentrate on activities that contribute to company growth.
Collaboration also allows a business to:
- Throw the most skilled resources at a problem, which may mean a solution is identified more quickly and more cost-effectively than might be possible otherwise.
- Share resources across businesses to save investing in equipment or assets that may only be needed for a short-term project.
- Gives access to employees with very different skills to leverage individual knowledge, strengths and capabilities and maximizes organizational potential
- Builds company knowledge.
- Creates a learning opportunity.
Finding the right partner
Take care to identify which type of business (and person) would be the ideal alliance. It’s important to thoroughly research and evaluate all potential partners. Seek out companies which share your business ethic, strategy, and expectations of working together. Formalize any collaboration with a clear, written agreement that spells out roles and responsibilities such as who looks after the customer relationship, how profit is shared, who owns what (especially intellectual property), and who does what (the time involved).
Collaborating works best when each party feels they’re getting a synergetic benefit and able to achieve an outcome that’s out of reach on their own. Decide if collaborating will work for your business, identify what outcomes you’re after, find those businesses that match and then make contact.