Your Guide to Building Business Alliances

In the ever-evolving business world, companies are always looking for new and innovative ways to gain a competitive edge. One of those performance drivers is building strategic alliances. Surprisingly, more than 2,000 strategic alliances are formed each year, which grows by 15% each year. But we get it; sometimes, building those alliances can seem sketchy. For example, you see two big companies partner up and think, “What are those two powerhouses doing together?” But, as a business owner, it seems pretty intelligent, two establishments aligning themselves, highlighting strengths over weaknesses, deepening those pockets, so to speak, with greater brand awareness and expansion of customer base. What could be so bad? Despite all this glory, if you partner up with a comrade, there could be more of a bumpy road than you expect. 

So, how do you know if forming a partnership is right for you? Fear not, friends. We will guide you through some tips, tricks, and thoughts to help you figure out if a company/business alliance should be a part of your strategy. 

What Types of Alliances are Out There? 

As I mentioned, there are many great reasons to form alliances, specifically for boosting business and building a more extensive client base, which is among the most popular. There are long partnerships, short partnerships, red partnerships, and blue partnerships… just kidding about that last part! But seriously, there are highly complex and simpler partnerships, even some based on one product, service, or project. 

When you start to look for someone, you may find yourself crossing potentials off your list because your combination of business skills or unique assets doesn’t seem to align. Maybe your values don’t mesh. They don’t seem trustworthy, or a million other reasons that scream NO! But here’s a pro tip for you: DON’T DO IT! In today’s marketplace, you can successfully ally with just about anyone, even your biggest competitor, and remember that those screaming NO could end up being the best thing for your business. 

However, not to contradict what I said above, but if you find yourself saying no to “deal breakers” like values and trustworthiness, then by all means, please say NO. Those are two principles that should NOT be compromised. As someone who has worked for companies like this, you do not want to get you or your company tangled in unethical business practices.

Okay, so now we will get to what types of alliances are out there for you to partner with:

1. Suppliers – this one has been in the book forever! A partnership with a supplier increases the chances that you always have an excellent, beneficial product or service on hand. For instance, what if Spotify and Uber partnered and Spotify would provide stereo control to Uber customers? Think about it: not every Spotify customer uses Uber and vice versa. This allows each company to pursue prospects from the other existing customer base while promoting both products. BOOM!

2. Employees – Partnering with someone who already works for you? YES. Maybe someone has worked their way up from the frontlines or was a customer before they started working for you, and they have tight relationships with customers, suppliers, vendors, distributors, etc. Offer them a little bonus or incentive to motivate your staff to take on extra responsibilities, boosting their feeling of “ownership” in the company. They are familiar with your product or service, and you already have a relationship with them… win, win, win! 

3. Competitors – At first glance, competitors seem like enemies, but you know what they say: keep your friends close and your enemies closer! Consider it: you and your major competitor could pool your resources and create MAJOR wins. It takes so much to develop new products and services and penetrate new markets, but you can break through some big barriers when you’re doing it together. Look at Microsoft and Intel; this partnership allowed each company to funnel their resources into one core competency, Intel into hardware development, and Microsoft into software creation… hey, the proof is in the products. 

4. Customers – Similar to the employee road, this might seem odd, but they know the front lines, and they know your product or services from the outside looking in, which means they provide great insight, feedback, or connections you may have never thought of.

How Do I Know if an Alliance is Right For Me? 

This one is tough. While most alliances are wildly successful, others are equally a colossal belly flop. It’s not always clear if you need to form an alliance, but a rule of thumb is to look inside your company or business. If there’s an area you lag in – sales, growth, technology – then maybe an alliance is a great way to forge ahead. 

Does a potential alliance fill the holes you want to cover up? 

Here are some more things to think about… 

How is their financial situation? You want to make sure that a company isn’t going to go belly up after you strike a deal with them. Ask about their annual sales and growth, how much of their revenue is profit, and, more importantly, what their goals are moving forward and if they fit with yours. 

How do they operate? Essentially, how is the company managed? How many employees are there? What do their numbers look like from year to year, who’s in charge, and how much experience does the company have overall? 

Check their market presence and see where the company does most of their business. Could you reap a larger collective share of the market if you joined forces? 

***BIGGIE*** Does a potential partner take quality as seriously as you do? Think warranties, guarantees, customer service, etc. If their standards do not live up to yours, then say Buh-BYE. 

Look into how a potential partner markets its products or services. What is their budget, and how many people are dedicated to the job? And how will your new alliance make its debut? Pro tip: The next steps should involve a marketing strategy if this is not obvious. Your marketing strategy will be vital to leverage each company’s loyal audiences, media relationships for PR, and articles about your unique collaborations, among other approaches. AKA, add this to your list now! 

Finally, look for enthusiasm and desire for forming an alliance but mostly about their work, business, people, product or service, and customer. 

Great, so how do I approach a potential partner?

First, ensure they meet your criterion, then ensure your proposal is mutually beneficial. Be sure you explain everything they can do for you and then everything you can do for THEM.

Put all your cards on the table, and don’t be afraid to discuss every detail, even if you have some not-so-great skeletons in your closet. It’s better to discuss potential issues and work through them up front than get halfway through your deal and have everything fall apart. 

If they bite, great! Now would be an ideal time to discuss how you can turn all your resources and each opportunity into a mutual advantage. Also, you’ll want to talk specifics about getting your partnership up and running, map out the steps for bringing a new product or service to market, any future goals, a smooth transitional plan for the two companies, and acceptable divisions of duties. 

If your competitive partner said yes and there are some trust issues to work out, consider mapping out a plan for that, too, like signing non-disclosure agreements and when and how you want to divulge company information with each other. 

And then, think legal. 

Get the lawyers together, hammer out the details, and make sure that your attorneys take the time to protect your respective companies against any liabilities or problems that arise, but make sure it doesn’t drag on for months, making your new alliance miss out on opportunities. And, if nothing else, ensure there is an exit strategy that will allow both parties to get out of the partnership if the alliance doesn’t end up working. 

Most business alliances work out quite advantageous to both partners, so if you find a good comrade, it’s well worth the time and resources to make the relationship work. Happy partner hunting!

Have questions about building alliances? Want to dive into a more comprehensive business and marketing strategy to help you meet your growth goals?

Contact us today >> https://q2mark.as.me/ComplimentaryTriageCall.