A strategic alliance is an easy way to explore new market opportunities, to find new leads, attract new customers and really turbo-boost your sales but careful planning is imperative before you sign on any dotted line. Strategic alliances don’t involve upfront costs, but they do involve time, resources and energy so you want to be sure you find the right match.

Why form a strategic alliance? They allow your business to gain a competitive edge through access to a partner’s resources – whether they are markets, technologies, capital or people. With a strategic alliance, you increase your resources and capabilities which in turn boosts your company’s growth and expansion. You may gain access to more established channels of distribution, marketing or branding.

So, how can you form a successful strategic alliance?

1. Think creatively about possible relationships and try not to limit who you consider partnering with. Find the right partner and you might suddenly open up an entirely new customer base for your product or service.
2. Define your outcome. Decide what you want from the relationship. Are you hoping to gain access to a particular market, gain new customers, or find ways to retain your existing customers? However appealing a business partner may seem, it’s pointless to take the relationship any further if your goals don’t match.
3. Decide who you want to partner with. What type of company will be most beneficial for your purpose? The ideal partner in a strategic alliance is one that has resources, skills and assets that complement your own. The strategic alliance has to work contractually, but there should also be a good fit between the cultures of the two organisations. One of the biggest reasons for failure in strategic alliances is an incompatibility between company cultures.
4. There are many places to find strategic alliance partners: your existing customers or suppliers, your competitors, your industry’s professional or trade associations, trade shows, joint venture brokers, business networks, networking events, etc. Wherever you look, ask yourself the following: how well does their company perform? How do they feel about working in partnership? Will they share your level of motivation and commitment? Are they trustworthy? Is there a good match between the two companies’ values?
5. Take time to check out the reliability of your potential partner. Is the company financially secure? Does it have any current or previous credit problems? Does it already have strategic alliance partnerships with any other company and if so, how will it impact on yours?
6. Define the basics of how the strategic alliance will operate. Once you’ve clarified how the partnership will work for you, you’ll know which company and which kind of offer will be best. Look to work with companies that see as much of a benefit as you do in the partnership. Work only with partners that are as motivated as you are to make it work.
7. Ensure that the relationship works financially for both you and your partner. Unless you both gain from the partnership, one of you will lack motivation and feel resentful and the relationship will crumble.
8. Don’t tie the deal up with so many clauses that neither of you has room to move. Obviously an agreement is necessary but do try to keep things as streamlined as possible. Identify the results that will cause the strategic alliance to be most beneficial for your business and define the structure and operating issues that need to be addressed to achieve these results.

Conclusion

Strategic alliance partnerships may take time and energy to set up and run but they can also make a huge difference to your company’s bottom line.