Cultivating Strategic Alliances
Looking for a smart way to grow your small business? Strategic alliances are a good place to begin. The SME entrepreneur who invests in strategic alliances will most likely find it a reliable way of consolidating or improving on their market position. As with all business plans, there are some rules to keep in mind when trying to gain maximum benefit from your strategic alliances.
Communication should be your foremost consideration. While it isn’t necessary that each member of a strategic alliance have exactly the same objectives, each should still be committed to a common outcome. To make sure that you and your business alliance partner share similar goals it is important to be honest from the outset. That is, be frank about what you hope to achieve from the alliance, and what you can provide to make sure your partner’s needs are met.
One of the most common small business mistakes is the failure to clearly articulate the details of an alliance from its inception. The result of this failure can be significant; mismatched goals, insufficient commitment, and an inability to alter the alliance easily at a later stage.
Another tip for strategic alliance building - look for situations that will deliver strong benefits to both alliance members. Only take part in an alliance when you think it will improve your business relationship with the other party overall, not just during the term of the arrangement. Never initiate a strategic business alliance if you think it won’t support your business goals in the short or long term.
Knowledge sharing is also an area that you need to be aware of before establishing a strategic alliance. By mastering the ability to share knowledge effectively, you will smooth your new business partnership considerably. Also, knowledge sharing has important ramifications for your clients – if you can maximize the quality of knowledge that you receive from a business partner, you can then pass this on to your clients to ensure they are increasingly satisfied with your services.
For the SME it is also vital to understand what is involved in the development of a strategic alliance with a larger firm. When dealing with a larger firm, try to establish connections with several of the company’s members. This is important because, in a large firm, it is more likely that if one department is dealing with you, another will be unaware of, or at least unfamiliar with, the alliance.
Imagine what would happen if you had a single contact in a large firm, and that person suddenly left the company or moved to a different office – you would lose all the value of the strategic alliance that you had cultivated until that point.
Creativity is key here, too. The nature of many SMEs is that they are specialized in one area or another. That means that your skills and knowledge will be more attractive as a strategic alliance package to a particular type of organization. So do some research, have a look at your client lists, and try to determine which type of company is most likely to engage in an alliance with your firm. Then think of a new and interesting way in which you could package your firm to that type of company, and go for it!
Keep the big picture in mind. It is true that many small business owners choose alliances to pursue a fairly narrow goal, ensuring that they form a number of alliances and therefore cover the majority of their objectives.
So try and imagine how your current strategic alliance fits into your overall business plan, and tailor it according to how you see your company in the long term. Knowing as much as possible about the likely consequences of one alliance will allow you to prepare properly for future partnerships.
Remember also that not every business alliance is beneficial to a company. Some partnerships may have suited your goals when they commenced, but have since lost relevance. Others may have proved to be too narrow and need to be widened to meet your continuing business needs. In such scenarios, terminating the alliance can be beneficial to your operation in the long term.
Also, strategic alliances need not be the sole determinant of your business success. A small firm is only viable as long as it remains competitive, so try not to rely purely on your business partnerships for profitability and success. Instead, focus on your business’ inherent skills and strengths as well. In this way, you will retain an element of independence, and still remain profitable if your business alliances are not as successful as you might have hoped.
If you are able to grow your small business on your own and play to its strengths, chances are your company will prove more attractive to a prospective business partner anyway. Finding a strategic alliance that is attractive to you is only half of the equation – you also have to ensure that, from a partner’s point of view, your SME is the right one with which to establish a business relationship. |
