Does Your Business Engage in Strategic Partnerships?
By: Maria Martyak 02/04/2015
Explore the various business collaborations that can
help you grow your business
Business owners have long known their capacity to grow and develop their businesses. When those limits are reached, the business enters a period of stagnation, and the owners/management need to determine their options. Adding more employees could organically increase output, but they are costly. Taking a business loan to expand or enhance operations? This could also have detrimental financial implications, unless the management team is confident they can properly manage the funds to continue to grow the business and make enough of a return to pay back the loan.
Another option that would not bring on a significant financial burden to a company would be through a collaboration with another company, or a strategic partnership. While the term “strategic partnership” may seem a bit heavier than what you might be looking for, it’s really not. A strategic partnership is nothing more than a collaboration between two or more businesses to work towards a common goal. They allow businesses to benefit by sharing customers, audiences, funding, materials, and more. By aligning themselves, businesses are able to pool human capital, financial resources, and sales and marketing capabilities to fuel business growth on a larger, more efficient scale.
So what is a strategic partnership?
A strategic partnership is a collaboration between two or more businesses to achieve a common set of goals, bringing additional value and benefits to all partners. These types of partnerships can take several forms, including marketing and branding collaborations, financial partnerships where funds are exchanged between the partners, or new or enhanced sales and channel partnerships.
Let’s take a quick look at the various types of strategic partnerships a business can engage in:
The function of marketing is a crucial element of strategic partnerships. Making both sets of customers aware of the brand alliance as well as developing a third major audience will ultimately drive new business and revenue to both companies.
Ideally, if you are interested in forming a strategic marketing partnership, you should partner with a company that either shares your current customer base or a related one so that they are able to market your products or services to their audience.
An example of this would be: you own a design firm with a particular focus on creating custom logos and company branding. You could easily partner with a startup workspace, like WeWork, to offer your services to their clients, and vice versa. This referral-style partnership is fairly common and, again, sheds light on the fact that a marketing strategic partnership does not always have to be heavy and complex.
Ultimately, marketing for strategic partnerships will continue to play an ever-growing role in the world of partnerships and alliances. When it comes to increasing customer awareness, driving brand development, and gaining new sales, the marketing team’s tactics and activities will help all partners involved derive the highest value possible from every partnership.
Financial Strategic Partnerships
Finding a business partner who is looking to provide an investment is particularly tricky. This will involve a team with a strong financial background driving the partnership and will require solid due diligence to ensure that the investment partner is qualified and has the ability to meet their end of the partnership agreement.
Additionally, there is a second kind of financial partnership that is worth discussing - the joint venture. In this type of partnership, the partners pool their resources - financial, operational, and intellectual - to create a separate entity that is designed to bring financial benefit to all partners. Many businesses use joint ventures to diversify their own product offerings and may eventually absorb the intellectual property created, along with the financial outcomes, back into their own businesses when the time is right and the individual partners are able to sustain the continued business activity outside of the partnership.
Strategic Sales & Channel Partnerships
Channel partner is a general term that covers many types of strategic sales partners, including resale partners and other businesses with the capacity to market your offerings to their customers. Different from the referral partnership that was previously mentioned, a channel partner is contractually obliged to resell your goods and/or services. In this scenario, the resale partner receives payment for doing this, typically as a percent of the revenues generated or on a flat, per item sold basis.
This is fairly common practice for credit card companies. Many times you receive an offer in the mail that when you sign up for a credit card, you also have the chance to purchase magazines at a significantly reduced price from the newsstand price. In this instance, the credit card company is “reselling” the magazines for the publisher, and most likely taking a percent of the revenue generated for all of the magazines it sells.
Supply Chain Partnerships
These types of partnerships are what keeps the world’s supply chains functioning at the speed and efficiency we see today. Within the supply chain, you will find many business types, such as manufacturers, distributors, retailers and raw goods suppliers. They are the ones who ultimately supply your business with the things that it needs - from raw materials to everyday office supplies.
Between each of these business types exists a strategic partnership, ensuring that they work closely with each other to make sure that the items are delivered properly and on-time. Many of these strategic partners are able to offer each other discounted prices on their goods, incentivizing other businesses to partner with them. Most importantly, these strategic partnerships can result in creating new products specific to your business needs, which give your business a competitive edge.
An example of this would be when your business needs a bulk order of custom letterhead. You have agreed to partner with a certain printer who is able to offer you a discount in exchange for exclusively purchasing from him. Chances are, this printer has also partnered with an ink supplier who delivers his ink at a special price point just for him. And so on the system goes through the supply chain, ensuring that the materials are produced and delivered so that your business can get its custom letterhead on time and at a competitive price.
Benefitting from Your Strategic Partnership
As I mentioned earlier, the key to developing a long-lasting, financially rewarding partnership comes from a few factors: determining what kind of partnership would best benefit your business, finding the right partner, and executing upon your strategic partnership strategies. While finding and developing a partnership may take some time, ultimately your business will see results and increasing revenues when done right.