By Susan Baka,
Perhaps you’ve mastered the art of networking and realized the importance of relationship building with key contacts. But now, how can you leverage these key contacts in a way that can help you grow your business? The answer—form strong strategic alliances with other companies. Whether your business is small or large, creating such domestic or international partnerships can help gain an edge in today’s marketplace.
What exactly is a strategic alliance? It’s any cooperative agreement where companies come together for a specific duration and/or project and add value to each other through the alliance. Resources, skills and/or capital are pooled for mutual gain. Agreements can cover things like:
• Start-ups
• Marketing
• Outsourcing
• Research & development
• Licensing
• Production
A tangible growth trend
A visible growth trend
An encouraging growth trend
Growing trend
According to Industry Canada, international evidence suggests that strategic alliances have been on the rise for several decades, with an estimated annual growth rate of 25%. This makes sense in our increasingly global economy. Consider the many potential benefits for your business:
• Diversifying your product/service lines and markets
• Providing access to new markets and product knowledge
• Reducing or sharing potential risks
• Blocking competition
• Avoiding ‘reinventing the wheel’
• Reducing innovation costs
• Shoring up gaps in your business
• Accessing new resources
• Enhancing your capacity to bid on large contracts
• Strengthening customer, supplier and other relationships
• Increasing your export capabilities
Despite the many potential benefits, strategic alliance partnerships can fail without careful consideration by both parties. Here’s how to begin and ensure success:
1. Select your partners carefully. Look for peers and who are like-minded and share your ethics. Viable sources include networking events, online groups or social networking, industry and trade publications, trade associations, government agencies, and even through your banker, lawyer, or accountant. Make sure the alliance is a win-win situation. For example, if you plan on tackling the global market, your potential partner may be international, but may lack the product knowledge you have.
2. Be clear about your expectations and desired outcome. Identify the kind of alliance you want--marketing, licensing, distribution, technology, R & D, etc Calculate the amount of time you can both realistically commit to the project. Determine how much you can afford to invest and lose, should your alliance fail. You would be wise to negotiate a formal contractual arrangement for further peace of mind.
3. Communicate, communicate, communicate. Many business relationships fail because of faulty assumptions and poor communication. What’s obvious to you may be unclear to your partner, especially if you are dealing across cultures or in different languages. To avoid failure, take notes, have minutes of meetings recorded, and document all agreements and actions to be taken.
4. Set specific timelines. Set trial timeframes to get an idea of your partner’s work ethic, management style, attention to detail, and true commitment. Be cautious about taking things to the next level before testing the waters. If your partner misses the first deadline, how will he or she ever meet future ones?
5. Establish exit clauses. Decide upfront—before anything goes wrong—on an exit strategy that will suit you both should the alliance fail. It’s better to lose a partner in the early stages of a joint venture than to lose your good name in the marketplace. Brainstorm possible best and worst case scenarios.
6. Celebrate your successes. If the partnership is working well, don’t forget to take a breather now and then and enjoy your mutual accomplishments. To maintain both your motivation, it’s important to celebrate the milestones in your alliance, such as the acquisition of your first big corporate account or receiving an award for exceeding industry standards. A lot of work and a little bit of play go a long way in a maintaining a healthy and successful strategic partnership.
The possibilities for women business owners and entrepreneurs to create strategic alliances are endless. Do your homework, target a strategic and motivated alliance partner, and be prepared for benefits and potential risks that may come your way. It can be a delicate balancing act to maintain your autonomy and preserve your interests. By sharing resources, costs and risks, your strategic alliance may catapult your growth in a way you might never achieve on your own.
Perhaps you’ve mastered the art of networking and realized the importance of relationship building with key contacts. But now, how can you leverage these key contacts in a way that can help you grow your business? The answer—form strong strategic alliances with other companies. Whether your business is small or large, creating such domestic or international partnerships can help gain an edge in today’s marketplace.
What exactly is a strategic alliance? It’s any cooperative agreement where companies come together for a specific duration and/or project and add value to each other through the alliance. Resources, skills and/or capital are pooled for mutual gain. Agreements can cover things like:
• Start-ups
• Marketing
• Outsourcing
• Research & development
• Licensing
• Production
A tangible growth trend
A visible growth trend
An encouraging growth trend
Growing trend
According to Industry Canada, international evidence suggests that strategic alliances have been on the rise for several decades, with an estimated annual growth rate of 25%. This makes sense in our increasingly global economy. Consider the many potential benefits for your business:
• Diversifying your product/service lines and markets
• Providing access to new markets and product knowledge
• Reducing or sharing potential risks
• Blocking competition
• Avoiding ‘reinventing the wheel’
• Reducing innovation costs
• Shoring up gaps in your business
• Accessing new resources
• Enhancing your capacity to bid on large contracts
• Strengthening customer, supplier and other relationships
• Increasing your export capabilities
Despite the many potential benefits, strategic alliance partnerships can fail without careful consideration by both parties. Here’s how to begin and ensure success:
1. Select your partners carefully. Look for peers and who are like-minded and share your ethics. Viable sources include networking events, online groups or social networking, industry and trade publications, trade associations, government agencies, and even through your banker, lawyer, or accountant. Make sure the alliance is a win-win situation. For example, if you plan on tackling the global market, your potential partner may be international, but may lack the product knowledge you have.
2. Be clear about your expectations and desired outcome. Identify the kind of alliance you want--marketing, licensing, distribution, technology, R & D, etc Calculate the amount of time you can both realistically commit to the project. Determine how much you can afford to invest and lose, should your alliance fail. You would be wise to negotiate a formal contractual arrangement for further peace of mind.
3. Communicate, communicate, communicate. Many business relationships fail because of faulty assumptions and poor communication. What’s obvious to you may be unclear to your partner, especially if you are dealing across cultures or in different languages. To avoid failure, take notes, have minutes of meetings recorded, and document all agreements and actions to be taken.
4. Set specific timelines. Set trial timeframes to get an idea of your partner’s work ethic, management style, attention to detail, and true commitment. Be cautious about taking things to the next level before testing the waters. If your partner misses the first deadline, how will he or she ever meet future ones?
5. Establish exit clauses. Decide upfront—before anything goes wrong—on an exit strategy that will suit you both should the alliance fail. It’s better to lose a partner in the early stages of a joint venture than to lose your good name in the marketplace. Brainstorm possible best and worst case scenarios.
6. Celebrate your successes. If the partnership is working well, don’t forget to take a breather now and then and enjoy your mutual accomplishments. To maintain both your motivation, it’s important to celebrate the milestones in your alliance, such as the acquisition of your first big corporate account or receiving an award for exceeding industry standards. A lot of work and a little bit of play go a long way in a maintaining a healthy and successful strategic partnership.
The possibilities for women business owners and entrepreneurs to create strategic alliances are endless. Do your homework, target a strategic and motivated alliance partner, and be prepared for benefits and potential risks that may come your way. It can be a delicate balancing act to maintain your autonomy and preserve your interests. By sharing resources, costs and risks, your strategic alliance may catapult your growth in a way you might never achieve on your own.
source: http://getgrowingforbusiness.scotiabank.com/articles/how-form-strategic-alliances
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