Building Small Business Partnerships
Small business partnerships are not a once-in-a-blue moon opportunity. Rather, they are an everyday strategy—whether in the form of an alliance, merger, or collaboration—for enhancing your small business’s success. To strengthen your company as well as its product or service offerings, you can partner with another brand that makes sense for your business and its strategic objectives. Such collaborative efforts can be mutually beneficial: They may offer you access to resources and expertise not readily available to you otherwise, or enable you to attain new customers at a lower cost than if you developed those offerings on your own. A small business partnership is not just about giving up part of your company; it’s about making it stronger, so both entities benefit from the arrangement. Here’s why partnerships are important for any small business and how to get started building them.
Why Small Business Partnerships Are Important
While small business partnerships are often viewed as a strategic decision, partnerships also have significant emotional and psychological benefits. If you are on the hunt for a partner, you should keep in mind that your company’s culture and values must be compatible with those of your potential partner. Finding the right partnership can help you establish a stronger brand identity and boost your reputation in the market. Having a partner also gives you more security and less risk by diversifying your business portfolio and managing your cash flow more effectively.
Identifying the Right Partner
Partnerships don’t happen overnight. You must take the time to identify the partner(s) who best fit your business needs and objectives. There is no set formula, but there are a few points to keep in mind as you begin this process:
Identify your needs. First, identify the needs of your small business, including its strategic objectives, current financial situation, and target market concerns.
Know your strengths and weaknesses. Assess your strengths and weaknesses as a company, and pay attention to any red flags (e.g., any significant operational issues, lack of capital, or unresolved management issues).
Look for complementary partners. Choose a potential partner whose strengths complement your weaknesses. If you are a manufacturer, for example, look for a distributor who specialises in your area.
Think outside the box. Don’t limit yourself to industries that you’re familiar with. Expand your search to include companies in different industries with expertise that could supplement or enhance your products or services.
How to Find a Good Small Business Partner
When you have a list of potential partners, take the time to evaluate each one. You can start by asking yourself the following questions:
Is the company financially stable?
Does it have a reputation for honesty and reliability?
What are its strengths and weaknesses?
What are its strategic objectives?
What are its key business drivers?
What goals does it have for the next 12 months?
You should also explore whether the company meets your company culture and business requirements. You can do this by examining the company’s public history, including its press releases and annual reports, and talking to people who know the company well. Furthermore, you should also assess the company’s track record and past performance to determine its ability to meet your expectations.
Types of Small Business Partnerships
Different types of business partnerships can benefit both parties. Selecting the right partnership may involve weighing the relative advantages and disadvantages of each type. Here are some partnership models that small businesses can use:
Affiliation: If you are looking to get your brand name out there, affiliation could be the best option for you. This type of partnership may involve the use of another company’s logo, signage, or website. You could also promote your partner’s products or services within your own marketing materials. Affiliation helps you expand your customer base by increasing your presence and visibility. It may also allow you to reduce costs and overhead, such as marketing costs and equipment purchases.
Joint venture: A joint venture is when two or more parties work together to create a new product or service. You may want to pursue a joint venture if you are looking to expand your product or service offerings. You may also want to conduct a joint venture if you are looking for expertise that is not readily available to your company. Joint ventures can be beneficial to both parties, as each has something to offer the other.
When Should You Not Build a Partnership?
Partnerships should strengthen your company and enable you to expand your product or service offerings. If the partnership is generating unwanted or unnecessary risks, or if it is not likely to bring long-term benefits, then you should consider terminating the partnership. For instance, if your partner is experiencing financial or operational issues, this could eventually impact your company. You may want to consider terminating your partnership if you notice a sudden change in your partner’s behaviour.
Key takeaway
A successful small business partnership can increase the longevity and profitability of both parties. However, it is not always easy to find the right partner at the right time. In order to do so, you must identify your company’s needs and strengths, and then find a partner whose strengths complement your weaknesses. With the right partnership, your small business can achieve more than you ever thought possible.