Competition is here again, but this time it is not about fighting back at rival business or counter attack or any type of attack you might do to sustain or win in the market of operation or business environment.
I am keen on this. This is about building collaborations with other businesses to develop strategic alliances. If you want to succeed in the business world, whether you operate a micro, small, or side hustle business, guess what, not every business can be your competitor. Some can be your main competitors, others as your alliance.
What is Strategic Alliance?
A strategic alliance is an agreement between two businesses that have decided to pool their resources to work on a specific, mutually beneficial project.
With this definition, you can collaborate with like-minded businesses to work on a specific business or role that will benefit both parties. If the benefit is only vital to one person or business, then I will advise you to consult your partner to discus more about it to make it favourable for you too. But, upon the necessary consultations nothing is unchanged. Then I will advise you to take some steps to remove yourself from the alliance or partnership.
Why you need to create alliance as a Micro, Small and Side- hustle business?
Opportunities at your disposal
Sometimes being useful in your market or competition can be very hard to do. It is very hard to do that as a single business, you will need an extra hands to help you achieve your goals.
Assuming you distributes computers, and lately you won big contract to distribute 100 computers to a private school, upon checking your experiences and resources you can't fully meet that number, and it is kind of thing you don't want to loose. Therefore in this instance, you need to attached yourself with another business which does services or product like you, combine your resource together to meet the demand of the client. Both parties must collaborate, and deliver to their best to satisfy customers requirement and specification.
With this example, it provides the business the opportunities to expand its spectrum of experiences and clienteles which pave the way to get much bigger revenue in the future due to the strategic alliance. A lot of small consulting firms combine their service to create a consortium to deliver the best and in large quantities.
Competitive advantage
Through the combined efforts, you will have the avenue to know more about your Unique Selling Proposition (USP). You will find more about your strength and weakness during your assessment when picking a partner to assist you achieve your business mission and vision. As you work together, you will discover more than you know.
Cost sharing or reduction
One of the main reasons why businesses engage in Strategic Alliance is to reduce cost, since parties pool resources and strategies together which encourages cost reduction and thereby share cost involved in the processes, resources and strategies.
With the first example where a company collaborates with another computer firm to meet the needs of a customer. Instead of provide everything by yourself you share the benefit and cost to make the goal possible.
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How to get a strategic alliance and maintain it
Below are tips you will need to find an alliance with an eligible partnership.
Know your goals and objectives
Before you jump in any alliance with anyone. Be it a friend or anyone you feel you have to join forces to grow. There is a need to know the mission, goals and objectives of your business. Find out where you want to go when an alliance comes in to grow your business, your proposed aims and objectives. Are these objectives tangible? Do they have a future when you engage in them? Guess what, some alliance are just for short period of time and can't last for long. Assess your firm critically before joining one, your refusal to that can land you into trouble to the extends of leading you to a problem with your reputation.
Find your strength and weakness
Now, you know what you will gain when you join forces with other people to push your business train. It is time to identify what your firm is good and weak at. It is also known as the SW (Strength and Weakness) of your business. No business is perfect and moves high on the strength. You have your superpower and weakpoints. It will help you ascertain where to add your strength to the partnership, and where you can withdrawn your capabilities and add your partners strength to make the alliance complete. This assessment will assist in the scoting phase when you are finding the right alliance who you can work together to produce better output for your goals and objectivies.
Identify your partners
Pick a list of people you think can share the same value and needs as yours. Focus on their strength and weakness. With this you dont need to do a deep research about them, pick them according to the observations you have made about them, and align their strength and weakness to ascertain if you have any corelation with them.
Research about them
You don't need to focus on observation again, you have to advance on your research about them. If they have website and social media account, do a desk research about what they do; whether it aligns with what you are seeking to look out if the business can be a potential partner. Ask few people who have come into close contact with them. Questions might include products, customer experience and pricing. What is their reactions to your potential partner? is it worth the try?
Know your compatibility
Develop a compatability criteria; what is your lookout point in your partner(s) or alliance? Do they meet what you are looking for?
The main objective about knowing the compatibility is to attach yourself and business with the right partner who will share the same objectives as yours. When you are able to match them, pick similarities where both will benefit when you join your heads together. Pitch to them on what you have on board and how it can help their business. For instance, a small business distributes customerized glass jar,mug and other glassware and collaborate with another business who sell ceramics mug. This is a moderate alliance to sell both partners products, which is not strong partnership but well-appreciated kind of strategic alliance.
Resources available
Periodically communicate with each other to find the kind of resources you will need for this alliance. Know each other financial stregth and how much each of you can contribute to make the goals possible. Be sincere to yourself, and transparent if you want to go far.
Create an agreement
Most people create a strategic alliance with anyone they trust, don't create the neccessary documentations because they believe they trust them. With this practice, I frown against it because I believe contract or agreement must be developed since every agreement is prone to be breached at any time. With common grounds, you can develop a legally binding document to support the partnership. Let a legal person guide you to make a fully binding document. Don't think you are a small-size business and won't need it. It is best to start as a young firm.
Conclusion
All business needs a strategic alliance in certain level of the business lifecycle. Getting the right one is key to small or medium businesses, too. Don't just pick partners because you feel you like them, but critically assess them including their readiness.