Use the power of strategic alliances

No man is an island. You may be bravely striding down the road of managing your business but there may come a time when a strategic alliance will give your business the strength for long-term sustainability.

Strategic alliances are opportunities for small businesses to accomplish things that might otherwise take much more time, money and resources. The competitive environment of today's business world is forcing companies to devise imaginative ways to build brand identity, connect with customers and attract quality employees. More companies then ever are teaming up to enhance their competitiveness in the marketplace and keep up with ongoing changes in technology. Just in the past two years more than 20,000 corporate alliances have been formed worldwide and studies by Booz, Allen and Hamilton show that the number of alliances in the United States have been growing by 25 percent per year over the last decade.

A strategic alliance is formed when two businesses combine resources to gain additional business. It comes about when one company alone cannot fill a gap in the marketplace, or when two companies pool together resources and expertise to enter new markets or perhaps share financial risk. Some alliances are reached through formal written agreements, while others are created with a handshake. Whatever the structure may be, there is one goal: use the strengths of each member of the alliance to accomplish things that otherwise would take much more time and money.

Small business owners with limited resources and market reach could benefit from cooperative agreements with other organizations and business entities. Author Isabel M. Isidro suggests several ways that a small company can collaborate with another person or business to bring added value, revenue, traffic or expertise to the organization.

Partner with a key customer. If a substantial amount of product is sold to one company, it is best to explore opportunities for an alliance between the organizations. The goal is to preserve the relationship, since losing the biggest account of the business could be devastating.

Partner with a brand leader. Most small businesses benefit from alliances that add value and prestige, not just money. Often a formal association with a brand leader provides leverage for marketing and advertising.

Partner with a former employer. Entrepreneurs often start their own companies after seeing partnership potentials with an employer. For example, a business may develop a product or service that provides a former employer with a solution to a problem. Often arrangements can be made to sell this product or service to the former employer under a long-term contract.

Partner with a competitor. Competitors, if handled right, can be excellent alliance partners. You could work hand in hand with a competitor over contracts that may be too large for your business, or refer customers and projects if manpower is tight. If a good relationship is cultivated, competitors will reciprocate and pass on projects or contracts that fit your strengths.

Partner for cross marketing. Cross marketing involves two businesses with different products pooling resources and collectively marketing a target population.

Your company may be a solo enterprise and it can stay that way, but there is added value in making connections. Strategic alliances and partnerships are a smart solution. Keep in mind a win/win philosophy and you will discover ways to grow your business without direct use of scarce resources.