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Types of business partnerships for small business

The right business partnership can boost your business growth | Guide My Growth

Business partnerships can be used to grow your business. A business partnership can help you:

  • save time
  • enter new markets
  • attract new customers
  • increase your sales
  • save money
  • experiment with new business ideas and
  • create a stronger position as compared to your competitors

There are many kinds of business partnerships.

Today, let’s look at 6 types of partnerships.

1. Sales partnership to boost business growth

In this type of partnership, business A and business B agree to sell each other’s products.

They can sell their products independently, meaning that business A expands their product range by adding the new products to their store.

The main benefit for the partners is that they are able to expand their products without having to buy and hold the stock.

They can depend on their business partner to make sure they are offering the most recent products and if a product is not selling well, they can just return it to their partner. This reduces the risk of doing business.

In addition, the partners can generate additional sales and revenue.

For example, a store selling computer hardware products (business A) and a store selling office supplies (business B) decide to become partners.

When a customer goes to business A, they will also be able to buy office supplies. Business B will get additional sales of the product while business A will receive a commission on the sale. The commission is usually a percentage of the sale amount.

This type of partnership is easy to carry out and very common.

2. Co-branding business partnership

In this kind of partnership, business partners sell their products as a package using co-branding.

Co-branding means that you either put the two separate brands on the package (less common) or use a new brand for the package.

By selling the products as a package, they are able to increase their sales at low risk. For example: shoes (product A) and shoe polish + brush (product B), or portrait photography (product A) + picture frames (product B).

Business partners make money through additional sales and commissions. Customers save time and money because of the combination of the products.

For example: when a customer goes to the picture frames store (business B) to buy a frame, they also receive a coupon offering them a discount if they buy a photography service from the photography business (business A).

Then, the customer goes to the photographer (business A) and buys passport-sized pictures using the coupon. Business A will have additional sales from this new customer while business B will receive a commission on the sale from business B.

To be successful, it is best to look for businesses that are complementary to your own business and that have a similar type of customer.

It is very important that your partner should be able to send customers to your business, but it is also very important that your partner has the same business values as you. If not, your reputation may suffer.

3. Distribution partnership

The distribution partnership is similar to the sales partnership.

The main difference is that in the sales partnership, the 2 partners sell each other’s products. Whereas in a distribution partnership, partner A is asking (and paying) partner B to distribute their products or services to partner B’s customers.

In this situation, business A will likely be bigger than business B. Also, it is highly possible for business A to work with multiple distributors.

The main benefits for business A is that working with distributors will allow them to reach new target markets and customers that they themselves may not know how to reach.

It allows them to promote their business at lower cost than if they were trying to do everything themselves.

The benefits for business B (and other partners) is that they will be able to add a well-selling product to their business as well as generate commissions through sales of the products.

Sometimes, business A may even offer business B some financial compensation for stocking the product or even provide some training or other facilities.

Coca Cola used this approach to their benefit. They work with resellers in every country that are able to access even the most rural areas in the country.

  • The resellers gain access to a product that sells well, and at times are able to upgrade their business through support from Coca Cola.
  • Coca Cola gains access to new markets in areas they do not know how to reach. When the product sells well, Coca Cola opens production facilities.

This approach can also be taken by small businesses.

It will allow them to test the market for their product or service before they commit to doing huge investments.

4. Service exchange partnership

This type of partnership is mostly a B2B strategy to increase the number of partnerships that you have.

Partners do not exchange money, but rather exchange services or products. It is a type of bartering that can help to keep your expenses low, while also allowing your business to benefit and grow.

For example, you are a marketing consultant and you are looking for somebody to do the graphic design for your logo and calling cards. Instead of paying somebody, you can offer to provide certain marketing services for them in exchange for them providing the designs for you.

The both of you can also agree to share information on your website or Facebook page about each other. For example, you can share their logo and contact details and thank them for doing the designs.

While they can do the same as they thank you for the marketing services. This way, the 2 of you gain additional exposure at no cost.

You can also take this kind of partnership further by growing it into a co-branding partnership.

In that case, the 2 of you work together to offer services under 1 brand so that you will be able to provide the services the 2 of you provide to customers who do not want to deal with multiple businesses.

5. Promotional business partnership

Promotional partners are businesses that agree to help you promote your products or services. It is similar to a distribution partnership.

The difference is that the business A is not putting their products or services in business B’s store. Business A is giving business B all the necessary facilities to promote the products or services that business A is selling.

For example, business A is a business offering all products to organise parties and events. Business B is a pastry shop that also caters to parties or events. Business A can enter into a promotional partnership with business B where business B will promote business A by sending customers to business A.

This could be by offering them an exclusive discount if they go and buy from business B. The discount can only be gotten from business B.

The two partners can also combine types of partnerships.

For example, business A and B could also offer a package (co-branded partnership) where they offer catering services and party supplies at a discount for birthday parties or weddings.

The main benefits for business A is additional sales and less expenses for marketing & promotions.

Since business B is doing the heavy lifting, trying to encourage customers to buy from business A, business A can now focus their marketing budget on other areas where they expect to get a higher return.

Whereas business B can generate commissions, build trust and build their reputation by partnering with the bigger or more well-known business.

6. Cause partnership

Customers love businesses that support their local communities! This could be a local sports team, a local school, or a local NGO.

It does not even have to be the most well-known or most successful organisation. The most important thing is that the organisation you are supporting should match with your business values.

There are various ways to partner with a local organisation to grow your business.

  • You can donate your time (or your employees’ time) to support them in areas where they are lacking. For example, if you are an events company, you can work with a local NGO and help them organise few fundraising events during the year. In return, your products can be available for sale during the event, and your banners can be put up to show that you are a sponsor. This can hugely increase your exposure and build your brand at low cost.
  • You can also choose to give a percentage of certain sales to the organisation. For example, if you have a particular product that you want to promote, you can choose to donate 10% of each sale of that product to the organisation. Make sure to advertise this on your social media and in your marketing, and also ask the organisation that you are supporting to share this support. This way, you will also gain additional exposure as well as word-of-mouth increase to your reputation.

Choosing to support a local organisation can be a fantastic way to boost your visibility and brand recognition.

It can also help to attract new customers as well as increase donations and volunteer support for the organisation that you are supporting. A true win-win for all those involved.


The best business partnerships are built on trust.

When you trust each other, you can achieve so much more than by working alone.

You can host joint business events, you can do joint marketing, and you can build your business networks together so that both businesses can grow.

Don’t forget to check out this article about how to put your own house in order before choosing a business partner.

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