For those of you who are just joining us, welcome! During the past weeks, we have been talking about various business growth strategies for small businesses. Many of you have asked me to pay particular attention to business partnerships. You want to know how to choose a good business partner, and how to make sure that a business partnership will be successful. Starting today, we will be looking at these questions, and more! Let’s start with an introduction to how business partnerships can help you grow your business.
Benefits of business partnerships
If you want to grow your business, but you are not sure if you can do it by yourself, consider a business partnership or strategic alliance. A partnership can have a huge positive impact on business growth, Particularly for small businesses. This is because partnerships can help you reduce costs and generate more profits.
The right business partner can help your business gain a competitive advantage. He or she will introduce your business to new customers, leading to more sales.
If you are a small business, you have already faced the situation where you are working until late at night, trying to catch up with everything that needs to be done. Whether that is record keeping, following up on customers, doing online marketing, or looking for ways to increase your profit. And you will have faced the situation where you have too few hours in a day to be able to do everything you want to do. This is where business partnerships can help.
Business partnerships allow you and your business partner to share the load. You can agree on how to divide the work for certain activities. This will free up your own time and allow you to focus on things that you are good at or that bring additional value to your business.
For example. Your business partner has strong capacities in online marketing, whereas you are great in generating sales from local businesses. The two of you decide that you want to expand your business in a particular region and you decide to run an online marketing campaign targeting companies in that area, followed up by calls to the business managers.
Instead of you spending time learning how to do online marketing, you can use your network to get the names and contact details of businesses that might be interesting to contact. Your business partner can focus on the online campaign, making sure to correctly target the kinds of companies you are interested in.
Your expertise will save the partnership time because you will have a list of names to start calling immediately. Your business partner’s expertise will save time because you will be able to reach more of your targeted companies.
In a good partnership, you and your business partner will be looking for ways to share and reduce expenses. For example, you may decide to run joint marketing & promotion campaigns. Or you may decide to do joint hiring of employees. You can even decide to use the same accountant, lawyer or supplier and negotiate a significant discount.
Being able to cut costs means that you will be saving money. This is money that you will then be able to reinvest into your business. Either by expanding the number of products that you are selling, by training your employees, or by investing in technologies that will speed up some of the work you are doing.
Collaborate on new ideas for business growth
Working with a business partner gives you the opportunity to collaborate on new business ideas and try out new marketing campaigns. You will have access to each other’s customers, so you can experiment with marketing campaigns for more customer segments. Or, you can collaborate on new packages of products or services to better serve your customers. Having a supportive business partnership gives you the opportunity to be bold and try out new methods, new types of marketing and new types of products.
Using what is called A/B testing, you can find out which marketing campaign gives you the best results.
A/B testing means that you create 2 marketing campaigns. One is your base (A) campaign, this is the one you will use to gauge the effectiveness of other campaigns. The second one is your B campaign. It is identical to your A campaign, except for 1 thing. The thing you change could be the picture, the heading, or the words in a particular sentence. The key thing is that you only change 1 thing, so that you will be able to track the effects of the changes.
This approach is particularly interesting if you are using social media or email marketing to market your products or services. For example: you run 2 Facebook ads that are identical except for the picture you use. Facebook advertising analytics will then tell you which one is bringing the most business. From there, you can keep experimenting and keep improving your ad.
Become stronger than your competitors
“Two heads are better than one.” A good business partnership allows you to capitalise on each other’s strengths. It also allows you to build a stronger defence against competitors.
Let me take the example of a solo consultant. This person specialises in procurement consulting & supply chain management. She has built up a decent business and a good reputation. However, her clients are complaining that they are struggling to sell the products that they make. They are looking for a way to improve their sales, and are considering hiring a marketing consultant.
This solo consultant, if she is able to partner with a good marketing strategist, will be able to set herself apart from the competition. Because other consultants only offer expertise in one area, while she (through her business partner) will be able to cover the entire value chain from procurement through sales. The added benefit is that she knows the business and can share her knowledge with her partner.
Improve efficiency through business partnerships
Having a business partner can also help you improve your efficiency. A business partner that is more advanced than you, can share their knowledge and expertise with you. This will allow you to improve in those areas.
Let’s say that you are a small business and you are struggling in the area of budgeting and sales forecasting. If you choose a partner who is strong in this area, you will be able to learn from them.
Good partnerships help each other to improve in many areas, including documentation and business processes.
Higher visibility & better branding
One of the best things about being in a business partnership is that both partners can increase their market visibility and achieve better branding. First of all, this is because you are able to pool marketing & promotion budgets and create shared campaigns while reaching more customers.
For example. You are a business that is strong in reaching customers in rural areas whereas your business partner is strong in marketing to customers in urban areas. The products you and your partner are selling are of interest to customers in all areas. By working together to create a joint marketing campaign, your business partner can benefit from more exposure to your rural customers and start getting more sales. The same applies to you since you will be getting more sales in urban areas.
This approach will allow you to build your brand, gain exposure to customers who maybe were not interested in you before, and build your reputation in new markets.
Key elements for success
So how do you get here? How do you create strong business partnerships that are beneficial and help to grow your business? It is topic that I will be addressing in the coming weeks, but for now, let me give a quick overview.
- A business partnership can only be successful if there is trust and if both partners are benefitting from the partnerships. This means that you need to do very good research. Your research will be into what makes somebody a good fit for your business, and also into how each business will benefit from the collaboration. If not, that “perfect match” may become your “worst nightmare”.
- To build trust, you and your business partner need to have shared values and a shared vision for the partnership. This will require both you and your potential partner to have in-depth conversations about how you live your life, how you run your business, and how you view a potential partnership.
- Your business partner should have different strengths from you. This way, both of you will benefit because the two businesses can now build on each other’s strengths to accelerate their growth. You will be able to create synergy.
- A successful business partnership requires you and your partner to have a good understanding of the roles and responsibilities that each person has. This should be documented on paper so the expectations are clear. You also need to communicate often – let’s say at least once a week – so that the both of you are contributing according to expectations. This will also allow you to quickly deal with any conflicts.
- You need to have a clear exit strategy. Despite your best efforts, a partnership may not be successful. To avoid serious conflicts, you and your partner need to have agreement about how you will terminate the partnership. You need to do this before actually starting the partnership!
We will be talking about all these points in this series. Join me next week when I will be looking at various kinds of business partnerships. Maybe one of those will be the kind you need to grow your business!