business alliances are often overlooked or not given much thought by small businesses, though, which can be vital in helping a company to grow and prosper. Too often, small businesses think alliances are only for large companies; hence they do not explore not pursue them. However, they can be just as beneficial for small businesses as they are for large companies. If a small business is serious about access to new markets, leveraging technology, more and more profits by using shared resources, you should consider a business alliance.
It is no secret, companies that share resources can create greater efficiency and become more profitable. business alliances can increase synergies and reduce potential risks, while companies that allows you to work together towards common goals as they keep their individuality. There are several types of business alliances, each with its unique characteristics.
Now it is the time to evaluate what your business brings to the table. What goods, whether tangible or intangible, not your business possess that when used with another company can unlock the greater potential for every business?
Alliance opportunities can be developed with suppliers, customers, investors, complementary companies and friendly competitors. Some alliances are natural matches, while others require a little 'creative thinking. I have listed the different types of alliances below, along with a description and an example of each. While reading through them, think about how your business can create the benefits of a win-win proposition with another company.
common
A joint venture is a contractual arrangement whereby you create a separate entity to carry on a trade or business on their own, separate from the core business of the participating companies. Companies often come together to share knowledge, markets, funds and profits. In some cases, a large company can decide to set up a joint venture with a small business in order to quickly acquire critical intellectual property, technology, or resources otherwise hard to obtain. Companies with identical products and services can also join forces to penetrate markets they would not or could not consider without investing a huge amount of resources. The separation is often inevitable because JV typically have a limited life and purpose.
Example: you have developed a product, but they have a limited distribution basis. Another company has the distribution system in place with large markets and wants to expand its product offering. It formed a joint venture with other companies to jointly promote the product. It is a win-win, because you do not have to finance the costs of reaching potential customers and another company expands its value and product offerings to its base of power distribution, without having to fund the costs of research and development of a new product. A contract was signed in detail aspects of the agreement.
STRATEGIC ALLIANCE
A strategic alliance is generally an agreement that you do not create a separate entity. Participants will engage in joint activities, but do not create an entity that would carry on trade or business alone. The strategic alliance partners can provide resources such as products, distribution channels, production capacity, capital goods, knowledge, skills, or intellectual property. Each alliance party maintains autonomy.
Example: A business management consultant wants to expand its services. Currently it offers coaching, marketing, financial and operational consulting. He noted an increased demand for human resources and consulting from its customer diversity. Currently he has no desire to hire additional staff with degrees and certifications necessary to offer these services. He seeks a strategic alliance with a consulting firm HR and diversity. The new company is committed to working with your company, when it presents the opportunity for their services and a percentage of the revenues generated by the services provided will be returned to his company.
PARTNERSHIP
A partnership is a legal agreement between two parties where both parties agree to share the profits and losses of a company town, undated scheduled end.
Example: a company whose main function is to sell advertising and produce unique promotional circulars to promote a number of small companies for the residential community has had a substantial monthly print bill. The company sought a partnership with a small printing company. The printing company was competent, but limited volume printing. And 'it required the purchase of equipment that the printer had not, but he saw the need. A contract was signed establishing the new company; cost of equipment was divided between the two entities. The circular coupons manufacturer sent all of its assets to the new company at a substantial discount. The profits from the new venture were divided between the circular coupons Company and the printing company. Each kept their original activities separate from the new business.
Marketing Alliance
marketing alliance is an agreement involving two or more companies to share costs and resources to promote each of the group companies. The target markets of the companies within the alliance usually share similar characteristics. The alliance can be a formal or an informal agreement.
Example: A group of restaurants locally owned and managed together to form marketing alliance. The alliance, similar to groups across the nation, promoting the uniqueness of their kitchens, in an attempt to stand out against the national chains. The group pools their resources for the ads running and produce a direct mail guide for promoting their menus by offering discounts. They pay a fee and then contribute several hundred dollars in gift certificates each quarter. These certificates are sold online at a discount to help fund their marketing efforts. Donate gift certificates help keep the cost down for the acceding restaurateurs.
COLLABORATION
A partnership is when two or more companies come together to share resources to create greater efficiency, such as sharing of employees, equipment, postage , rent, products and collaborations, etc. are generally for specific periods of time and resources.
Example: As a small business you may have a hard time throwing a first-class holiday party for your employees. You want to show them just how much they are appreciated, but the economy is tight and corporate funds are even tighter. To pool resources in order to have a party with a complementary company, it saves money for both companies and could pay for new business opportunities and networking.
Managing alliances
Every company should bring together a balance of forces to the alliance, but there are other considerations as well. You must manage the alliance to ensure that contributes to the success of every business. Listed below are some of the things you should consider to produce a successful alliance:
1. The alliances should be done with the decision maker. You need to have the support and commitment from the business owner and not just a manager.
2. Communication is a key ingredient. Clearly communicate the goals and objectives of the Alliance in the beginning.
3. Develop metrics will be measured against the alliance. Determine how it will be measured the performance of each company.
4. Allocate adequate resources to the alliance. You do not get half way through the project before determining the appropriate resources, have not been assigned to the Company.
5. Ensure that all participating employees are committed to the success of the alliance. You need buy-in from all involved, and not just a select few people.
6. Particular responsibilities of each of the participating companies. Be explicit in what the expectations are for each of the companies in the alliance.
7. Just like all things, nothing is perfect. Be prepared to make changes if something does not work.
8. stay committed and focused on the benefits of the alliance, rather than the disadvantages the alliance can cause.
Each party must benefit from the alliance in order to succeed. Otherwise, like a marriage, the relationship divorce quickly and all parties will suffer will increase from honeymoon in court.
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