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3 questions you must answer for yourself before you commit to any strategic partnership
By Brenda Thomson
A strategic alliance is any occasion when two or more business owners work together to create WIN WIN outcomes for each of them.
Strategic alliances are the most powerful and cost effective, yet under utilised way for small business owners to grow their businesses.
However they can also be the cause of significant pain in the form of financial cost, lost time and damaged relationships.
Here are three key questions that you MUST answer before starting any strategic alliance: If you can answer YES to all three questions then strategic alliances will help you to exponentially grow your business and your profits.
1. IS THE ALLIANCE OPPORTUNITY IN LINE WITH MY BUSINESS OBJECTIVES?
One of the key reasons alliances can go wrong is because the parties to the alliance got caught up in the excitement of the moment and got distracted by bright shiny objects. Make sure that any alliance opportunity you are looking at is in line with your current business objectives, that the timing is rightAND that it is the most effective strategy for you to achieve those objectives.
If it isn’t don’t do it!
2. DO THE NUMBERS WORK OUT?
A second reason alliances can go wrong is because no-one stopped and worked out the numbers. Is this a cost effective strategy? Will it provide a positive return on investment – if the answer is NO – don’t do it.. When considering an alliance make sure you know the answers to the following questions:
- What are the costs associated with the alliance and what is the cost per lead?
- What is your conversion rate likely to be?
- What is your lifetime value of a customer?
- What are your costs of goods sold?
- How to the costs of the alliance stack up against the costs of your other lead generation options?
- How much time is going to be involved? What is the real cost of that time?
Make sure that you know and understand all of the numbers in your business so you are able to make informed decisions about which alliances will work for you and which ones won’t. (This applies to ANY marketing strategy and most small business owners don’t know the answers)
3. IS THIS THE RIGHT PERSON FOR ME TO WORK WITH?
A third key reason why alliances can go wrong is because the fit between the two businesses wasn’t right.
Here are four things to consider:
- Do you share the same values and ethics?
- Do you share the same target market?
- Is there a fit between your objectives? (Will the alliance opportunity help both of you achieve your goals?)
- Is the timing right for both of you?
If you can’t tick YES to all four items then you should not go ahead.
There you have it… 3 questions you need to answer before embarking on any strategic alliance. Every time you answer YES to all THREE questions it’s time to starting using the amazing power of a strategic alliance to grow YOUR business.
More articles about Strategic Partnerships and JVs
Four steps to an effective strategic partnership plan
The 10 things you absolutely MUST know about creating strategic partnerships and joint ventures (JVs)
Is your business strategic partnership ready?
Seven steps to identifying the perfect strategic partners for your business
Strategic Partnership and JV Checklist
101 JV ideas
CEO and Founder, Synergy48 Group
Brenda has an honours degree in organizational psychology and a Graduate Certificate in training and development and she is an experienced trainer, facilitator and counsellor. She is a firm believer in mutual collaboration combined with a practical, hands on tools, strategies and systems as the most effective way to achieve real results in business.
Brenda has over 20 years of experience training in communication, team work, time management, productivity, organisation and strategic planning in large organisations. She is also the developer of the Business Benchmarking Toolkit used by Synergy48 Group members and clients to identify areas for improvement in their business processes.
Brenda is a sought after mentor, speaker and trainer in the areas of strategic partnerships and networking with a difference. She is passionate about actively giving back to the community. In addition to donating her speaking fees and a proportion of every Synergy48 Group membership to provide microfinance to help women in Malawi to start their own businesses, Brenda has climbed the Himalayas to raise money for Kids Help Line and helped lay a pipeline to supply water to a remote village in Tanzania.