Strategic Alliances Can Help Grow Your Business

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

An award-winning small business attorney in New York City, Nina is a sought-after professional speaker and Entrepreneur Magazine online contributor. She is the go-to counsel for knowledge economy and creative companies, delivering legal services and educational resources that save them time, money, and aggravation.

Posted on June 16, 2016 in All Systems Go!, Strategic Alliances

Ever feel like your big box competition is an immoveable mountain? Well, it doesn’t need to be that way.

strategyOne way that small business can compete with larger rivals is by forming strategic alliances.  Strategic alliances can fill gaps in your value proposition when you’re compared to huge competitors … yet allow you to retain your benefit as a small, customer-focused provider.

Alliances can take many forms.  You might share office space, advertising costs, or customer lists.  The companies may produce joint business proposals, or offer combined services to provide one-stop shop convenience.  It can even be a joint venture investment – like several individuals partnering to rehabilitate a piece of commercial real estate.

 

Obviously, each opportunity will be unique, but here are general guidelines to forming profitable strategic alliances:

  1. Choose partners with complementary skills or products – Of course, your ally shouldn’t offer competing products or services.  Instead, their offering should  complements yours – their customers should want your products/services and your customers theirs.
  2. It doesn’t have to be 50/50 – One ally can, and likely will, contribute more or receive more than the other(s).  Don’t try to force fit the alliance into a 50/50 framework.  Instead, discuss each ally’s contribution and negotiate a fair distribution of the venture’s proceeds – then document it all in a clearly-worded agreement.
  3. Develop clear time horizons – Allies should share mutually-beneficial goals and agree on the plan for attaining those goals.  Annual reviews (if not more frequent, for shorter projects) should confirm progress.
  4. Due diligence is nothing to be embarrassed about – This is business, and due diligence is a standard business procedure.  Do it well and often.
  5. Exit isn’t a strategy; it’s a certainty – Most ventures dissolve within a few years, if not sooner. In fact, some alliances may exist only to fulfill a specific project. Discuss how the alliance will end–especially if either partner needs to exit sooner than expected–and include that language in the alliance agreement

Tip:  Seek alliances that add to your value proposition; venture with partners who offer complementary services; but, be aware that alliances shift and always be on the lookout for new allies.

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