The key to growing your business is to discover creative ways to expand and develop into new markets. Strategic business alliance relationships have grown popular and serve as a means for both parties to increase their brand awareness and capital, without expending extra time or experiencing significant financial impact.
Prior to pursuing a business partnership, companies should identify businesses that offer different, yet complimentary services from their own system, but serve a similar market.
When approaching a potential partner in an alliance, ask yourself, “Not what your strategic partner can do for you, but what can you do for the partnership?”
After identifying a potential business that can help your business expand into a new market, the organization must clearly identify what it has to offer to the alliance. How will the partner gain value from the alliance with your company? The most crucial factor to consider with a strategic alliance is that it will be mutually beneficial, a win-win. If both parties are not benefiting from the alliance the relationship will deteriorate over time.
Strategic business alliances can be very instrumental to growing your business, offering opportunities to increase exposure of your brand through the partner’s channels, in addition to the potential to offer supplementary services to existing clients. With that said, partnerships musts be approached with caution. Both parties must overcome the emotion that motivates according to self-interest.
Access to Supplementary Services
The opportunity to offer supplementary services to clients that otherwise would not be available is a major benefit of an alliance. It is imperative that a business focus on its core competencies because when a business becomes a jack of all trades, it becomes a master of none. An alliance enables a company to offer its clients a whole new realm of services without losing focus on its capabilities and its specialized services.
Opportunity to Reach New Markets
Entering a strategic alliance can increase awareness of a brand among an entirely new market, that without the alliance, your company would not have the resources to reach.
Increased Brand Awareness
The potential to grow market size with a partnership presents the additional opportunity to increase awareness of the brand. A constant, growing brand awareness is one of the key elements to a successful business. If your brand awareness isn’t growing, your business isn’t growing. Strategic alliances allow an organization to reach a broader audience without putting in extra time and capital.
Access to New Customer Base
Forming a strategic alliance will provide a solid business partnership with access to a new customer base that the franchise would not have been able to access otherwise.
Choosing the Right Partner
Choosing the wrong partner can be damaging if it is not able to contribute to the growth of your business and offer a degree of dedication, honesty and integrity to the partnership. When researching businesses as potential partners, be sure to consider that this will often be an exclusive relationship, meaning it may very well be the only business your brand will be able to partner with in this category. Seek a business with a positive reputation in its industry that upholds similar policies and values within its business mode.
Once a relationship is formed with a business in a specific industry, the odds of forming additional in the same industry are unlikely, so do it right the first time.
Building a Mutually Beneficial Alliance
One of the most significant challenges of entering a strategic alliance is ensuring that the partnership is going to be mutually beneficial. It requires a lifetime of dedication, trust and honesty. It is important for both parties approaching an alliance to set their expectations clearly and concisely before the partnership is solidified.
Before entering a partnership it is imperative to discuss and address the “what ifs” of matters that could occur down the road that may be damaging to the relationship.
Knowing When to Reassess the Alliance
All businesses will constantly experience flux and change and initiatives that have once been prosperous may not be as such, two or three years down the road. It is important to reassess the alliance and change the foundation if it is no longer mutually beneficial. Both businesses must embrace that change is inevitable and they must be able to work together to reach new agreements over time
Sometimes the need to restructure will be clear, while at other times it will take the initiative of one or both sides of the partnership to actively seek whether or not the partnership is still working. It is a good idea to reassess a business alliance at regular intervals.
Strategic business alliances could be the next step in the growth and marketing initiatives for your business as they offer a wealth of benefits including increased brand awareness and the ability to reach new markets and offer supplementary services to your clients, but there is a certain level of risk involved and partnerships should be approached carefully.
Ultimately strategic alliances offer tremendous potential benefits to both parties, but like any relationship, both companies need to carefully assess each other’s motivations and expectations before making a commitment. It only works when both companies offer equal value to the relationship.
John T. Carter is a Partner withWitzke Berry Carter & Wander, PLLC in Bloomfield Hills, MI. Mr. Carter leads the firm’s Business Law and Commercial Transactions group and he has over 18 years of experience working with Michigan based organizations. Follow John T. Carter on Twitter @johntcarter. Connect with John on LinkedIn. For additional information on legal issues facing businesses visit the Michigan Business Law Center.
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