How to use strategic partnerships to grow your business
Author: Leanne Knowles
Article updated: Aug 2024
Introduction
Business owners often inhibit the growth of their business unnecessarily, because they believe they don’t have the people, skills, cashflow and resources they need.
When you’ve been in business for a while and you think about the business relationships you have established over the years, there are people and businesses with complementary skills and resources and access to markets that could be very valuable to you.
In turn, it’s very likely that your business has something of value you could offer in return. With some creative thinking, and inspiring conversations, amazing things become possible.
Many business owners hesitate to seriously consider strategic partnerships for a variety of reasons. They might have been burned by a previous attempt. They might have valuable trade secrets they don’t want to share, or they simply might be uncertain about how to mitigate the risks to make it work.
It’s true there are risks involved in the creation of a Strategic Partnership. However, there are risks in any expansive endeavour. The discipline of business is building structures, strategies and processes to manage those risks effectively. There is a foundational formula for Strategic Partnerships that can be applied in any business, and I’ve outlined that formula here.
What is a strategic partnership?
A strategic partnership is a relationship between two commercial enterprises, usually formalized by a formal business agreement.
- The partners to the agreement remain independent
- They share the benefits from, risks in and control over joint actions
- They make ongoing contributions in strategic areas
Strategic Partnerships enable faster growth and scale for ambitious business owners, by sharing resources, people, skills and access to markets.
There are broadly three types of agreements.
- Horizontal - Competitors agree to collaborate in a way that will improve their market position and adds value for their customers.
- Vertical - A business collaborates with other businesses in its supply chain, usually for a long-term commitment, for lower prices.
- Intersectional - Two companies from different areas agree to share their specialised knowledge for mutual benefit.
Why do you need a strategic partnership?
As you grow, you’re not only going to need more hands on deck, but you’re also going to need a whole new set of skills and experience to handle the changed environment.
The purpose of these partnerships is to enable the sharing of resources to promote faster growth for all partners – while adding new value for your customers.
Effective collaborations can provide you with everything you need, and assist you to scale more easily, with lower risk, and fewer internal resources.
8 reasons to set up a strategic partnership
There are a number of business functions that can be boosted with a Strategic Partnership.
- Financial
- Promotional
- Value Added Reseller
- Supply Chain
- Technology Sharing
- Product R&D Sharing
- Distribution
- Cost Centre Outsourcing
Where to find your opportunities
People and businesses in your existing network is the best place to look first for partners.
- Existing customers
- Businesses in other industries
- Business networks
- Trusted suppliers
- Start-ups in the news or in your network
- Competitors who are aligned with your mission and who you can trust
- Universities and other tertiary organisations
- Governments - National, State and Local
- Not-For-Profit - including sporting and industry associations
How to set up a strategic partnership
A successful Strategic Partnership starts with a needs analysis inside your own business that guides decision making.
The 5 questions you’ll need to answer first…
- What are your goals, and what do you need to get there?
- What’s missing from your existing capabilities?
- What other business could provide you with what you need - and who also shares your cultural and brand values?
- What do you have to offer that would be of value to them?
- How will you prepare your pitch to them? Who, what, when?
Once you find your new Strategic Partners, invest some time discussing in detail how things will work between you and create a simple agreement. Prepare your team well, and do the planning, so you can enjoy real success.
Collaboration agreements
- A contractual agreement has multiple benefits, the most important of which is clarity
- Clarity provides both parties with greater confidence to invest in the partnership, and to take the actions that will create success
- The agreement should reflect details discussions inside your own business team, along with similar discussions with your partner
What kind of businesses can use these strategies?
Almost all businesses can create powerful Strategic Partnerships to drive sustainable growth, scale and profitability.
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How to take the next step to create strategic partnerships
When you’re looking for a way to realise your business ambitions faster, Strategic Partnerships could be the answer. Here is your readiness checklist.
- Clear objectives
- Aligned with Strategy
- Business-wide agreement
- Team briefed and ready
- Clear financial and tactical agreement
About Leanne Knowles
Leanne Knowles is a former professional skydiver turned Business Growth Strategist, who started two successful businesses in the adventure sport industry at 24 years old and sold them both ten years later. Leanne founded Headswitch as a marketing consultancy in January 2000, and now helps business owners in B2B and professional services to grow and scale their business using smart, simple strategies, the latest tech tools, and productive business relationships.
