Last Update – December 17, 2014
Lately, I’ve been hearing stories about business partners and their tragic fallout from “strategic alliances” . . . largely because people rushed into them as the “next new thing” without thinking it through.
My advice: Begin with the end in mind.
The most important question to ask yourself about a strategic alliance is: Do I really need one?
Many small business owners run around “collecting” partnerships for the sake of having them, without focusing on whether their own business needs will get met. Or whether the work to create and sustain a business alliance will outweigh its benefits.
Don’t start by thinking, “I want to form an alliance – who can I bring on as a partner?” Instead start with, “I have a business goal and an alliance is a good way to get me there.”
Selecting Power Partners in Business
What are your immediate business goals? The answer to this question is vital, because it will help you decipher a) whether you will truly benefit from an alliance b) if so, who is the most appropriate ally for your company, and c) what is the best way to engage them.
For instance, let’s say you have decided that you can achieve your business goals better, faster, and more efficiently with an ally — rather than by yourself. If so, it is time to choose the right “power partners.”
Power partners are people or companies that can give your business the boost that you’re seeking in the way that you’re seeking it.
How do you choose? Before you align yourself with a new business partner you’ll want to ask yourself if the person or company:
1. Offers products or services that complement yours (direct competitors are often not a good power partner choice)?
2. Attracts the kinds of clients you want to attract?
3. Has a reputation that is unscathed (do your homework on this one)?
4. Is in an industry that you want to move into?
5. Is a larger (or smaller) business, and if so, will that make a difference in who controls the relationship?
6. Has the right type of experience?
7. Is enjoyable to work with — what is their “corporate culture” like?
8. Has clear goals to collaborate with you and your company? Are their goals compatible with yours?
Many small business owners don’t take time to pre-qualify their power partners . . . a significant reason why so many arrangements fail. But if you can answer “yes” to most of these questions, then you’re off to a great start.
Ironing Out Details
Once you have selected a power partner, focus on how you will work together. Some questions you may want to consider include:
- Will you collaborate on an ongoing basis, or for a particular project?
- Will you form a long term arrangement, or keep the business relationship on a short fuse?
- Will you collaborate for marketing purposes only, or will you jointly pitch and serve clients?
- Will you work exclusively with your power partner, or have similar arrangements with others?
Although most people use the term “strategic alliance” to refer to a whole spectrum of collaborative relationships, the term is most apt for arrangements that involve a longer time commitment and more involved responsibilities (especially if: money will be paid, joint clients are developed, and intellectual property is created).
Just like personal relationships, it’s best not to get heavily involved before you’ve had a chance to test the waters. Strategic alliances work best when they evolve naturally, over time, from successful collaborations . . . which is better than trying to force an alliance into being. Don’t be afraid to start small.
Finally, because the law doesn’t clearly define “strategic alliances,” it’s crucial that the parties to the alliance do. Whatever you call your relationship with your “power partner,” be sure to put your expectations in writing with a partnership agreement – particularly in situations where money changes hands, intellectual property is created, and you serve clients jointly. When you have a clear understanding in writing, you can forge a powerful and long-lasting alliance with your new power partners!
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