03 August 2015

I Get By With A Little Help From My Friends - Forming Strategic Alliances & Joint Ventures

I have found strategic alliances to be very beneficial over the years. For example, Pathway has a strategic alliance with a number of Accountants which is great for both sides. Both businesses work with small business owners which need and we refer them to one another, each gaining a bigger client base and more recommendations.

Your business may use a strategic alliance to:

• Share resources and information. Your businesses may be in the same field but you are likely to have expertise in different areas. Both businesses will grow stronger through sharing knowledge and learning from one another.

• Increase access to innovation and new technology. Another business may introduce you to a tool that totally changes how your business functions, which you may never have discovered without them.

• Reduce competition. By joining forces with a like-minded business, you will not only immediately lose them as a direct competitor, but you will also be creating a competitive advantage over other similar businesses by the pooling of both businesses’ resources and skills.

How do you know who to form a strategic alliance with, and how can you ensure success?

It can be difficult to let new people into your business world after doing things in a certain way for however long. How do you know who to trust? If you’re thinking about linking up with another business, check out these tips:

Select your partners carefully
Look for peers who are like-minded and share your ethics. You can make contacts in many places; at networking events, online groups or social networking, and even with or via your Advisers: Business Coach, Bank Manager, Solicitor, or Accountant.

Be clear about your expectations and desired outcome
Identify the kind of alliance you want and of course it needs to be a win-win. Can you both commit equally to the project? It would be wise to negotiate a formal contractual arrangement for further peace of mind.

Keep communicating
You will need to stay in regular contact to maintain a strong and successful alliance. Many business relationships fail because of faulty assumptions and poor communication. Make sure all communications are documented and don’t just assume your partner understands everything without explanation and rationale.

Set specific timelines
Set trial timeframes to get an idea of your partner’s work ethic, management style, attention to detail, and true commitment. It’s important to test the waters before fully committing.

And if things do go wrong…

Be sure to establish an exit clause when setting up an alliance. Decide upfront on an exit strategy that will suit you both should the alliance fail. Don’t be afraid to brainstorm possible best and worst case scenarios.

So do your research to make sure it’s the right strategy for your business, and target a strategic and motivated alliance partner. It may be tough but the benefits for your business, and your partner’s business, could be endless. By sharing resources, costs and risks, your strategic alliance may catapult your growth in a way you might never achieve on your own.

Kindly provide your views and comments and kindly connect via twitter: @SafarazAli

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