The Lone Ranger Forms Alliances to Do Business Today

“The Lone Ranger is dead.” Jan walked out of the room and I paused to consider that she’d labeled me as an uncooperative maverick. Her impassioned plea for me to consider doing business differently focused on the fact that tighter and closer relationships can ensure continued growth.

Like many Boomers, I enrolled in The School of Hard Knocks. Throughout my career, as an employer, employee, owner or partner, I integrated lessons and focused on improving my game without giving much thought to alliances.

“A strong alliance is greater than the sum of its individual parts,” Jan said. Alliances offer a way for sole proprietors to grow quickly, I reflected. For example, networks can frequently be building blocks for future alliances because they expose you to market or product opportunities you wouldn’t ordinarily encounter.

A networking alliance such as Business Networking International (BNI), encourages formalized referrals within its membership. Other networks such as Costco, offer member discounts on operational costs such as insurance, shipping or office supplies. Other networking alliances easily encountered include involvement in neighborhood associations, trade associations, local community/state meetings or forums and continual contact with a set of core, industry professionals.

The alliance you form could be simple; get your landlord to display information about your business to augment your marketing plan. Or, you might offer a coupon/membership discount for the purpose of encouraging referrals. Think about a professional network to which you belong or would like to belong. Consider the real benefits that you might garner from the relationship.

Is there information you need regarding political or legal issues? Does your business need exposure to market or product opportunities? One small manufacturing operation had the opportunity to be part of a national trade show at a fraction of the cost as a result of state alliance that they formed. Those leads developed into additional sales and new profits.

Alliance structures can range from the informal to the structured and complex. Fed Ex/Kinkos, for example, took product delivery teamwork to a new level with the most aggressive of alliances, a merger and acquisition.

A coop alliance lets two or more firms share in the distribution/marketing costs of each others products or the purchases of commonly used resources. Val Pak coupons are a form of co-op direct mailing.

In the last decade, supplier alliances have become increasingly critical to sustainable business growth. Depending on the firm, a supplier alliance can take the form of a strategic long term contract, a joint venture or a partnership. In either structure, interdependence between firms is created and both the firm and the supplier seek methods to maintain or enlarge market share, improve product offering and respond to market changes.

I returned to reality with a start. It was suddenly clear to me that no matter what type of alliance formed, a successful alliance requires hard work, continuing analysis of goals and marketplace conditions, ongoing and timely communication, resource allocation and a sincere commitment to a win/win outcome.

I smiled to myself as I assigned the Long Ranger the job of staying informed on the alliances that could best serve me going forward.

Growing Your Small Business Through Alliances and Joint Ventures

— Beyond Cold Calling, “Warm” Calling and Sending E-mails —

Many Solo Entrepreneurs work from a home office. Our only connections to the outside world are the internet / e-mail and the telephone. Cold calling, “warm” calling and sending e-mails may seem like the most obvious way to let people know about us and to generate sales. But, there’s another way that works even better.

An alliance is usually an agreement between two businesses whose services or products compliment each other. Each agrees to recommend the other’s services to their respective clients and to pay a percentage to the other if the referral results in paying work. Let’s say you’re a marketing expert, but you don’t do public relations. However, sometimes your clients require public relations as part of their marketing strategy. You meet with several public relations experts who specialize in different fields, but who don’t offer your type of marketing services, and you form 3 alliances. A 10% commission is what you agree on for mutual referrals that result in work. Now, both you and your alliance partners are more “full service” providers. You can offer PR services to your clients and your partners can offer marketing services to theirs through you. In addition you could add them as “partners” on your website, giving your company the advantage and versatility of an expert team. It’s a win – win situation.

A joint venture is formed when you not only have an alliance but you come up with a strategy to find customers together. Suppose you make custom window treatments. You decide to speak to a local fabric shop that specializes in upholstery and window fabric. If you could be their exclusive referral for customers that need someone to make their fabric into beautiful draperies, and you are willing to pay them a commission for each referral, what happens? They can say they now offer a new value-added service to their customers, which may mean a customer chooses their store above another. You have a steady source of customers. You may even get them to display some of your draperies made with their fabric in your store. They agree to allow you to advertise in their store, perhaps even offer a workshop, and you’ll recommend them exclusively to your clients. You may even advertise together. The possibilities are limitless.

There are numerous ways to put together alliances and joint ventures. Thinking outside the box and being clear about what benefits both parties would receive are essential. As always, getting the agreement in writing is a good idea, as is being sure the person you’re dealing with is honorable and reliable. And try to discover ALL the alliance possibilities that exist for your business. Our custom window treatment business owner above could also contact interior designers, furniture stores, residential real estate agents, home builders sales offices and even paint stores. So, what are you waiting for? Start today by:

— Making a list of at least 5 prospective alliance partners.

— Making a list of 5 ways the alliance would benefit them and you.

— Making a list of 5 ways you could implement the alliance.
start making contact!

One Final Note – some people have asked whether or not to disclose the partnership to the client. Sometimes it’s obvious that you are referring a client to your alliance partner, as in the case of the drapery maker and the fabric store. If it’s not so apparent, you may want to simply inform your client that you will be working with your alliance partner who is an expert in their field. For the sake of consistency, how much to explain to a client is something that you and your partner should agree upon up front.

Copyright 2003, Janis Pettit

Strategic Alliances for Cost Savings, Financial Stability and Buying Parity

Three important money areas where developing strategic alliances will serve you well are: Cost Savings, Financial Stability and Buying Parity.

Cost Savings

Cost savings is an important area for most organizations. I’m not suggesting that you only play the game of business from a defensive position, yet not wasting money is important for any business in an effort to increase net abundance.

In manufacturing elements of your product or entire product that could be built in plants (owned by others or in joint venture) with up to date technology, cost savings can be great. Sharing resources, or outsourcing, rather than owning and operating a manufacturing plant, will allow a synergistic partnering agreement allows you concentrate on your core strengths. This is the idea behind the Donnelly Corporation and their venture with Applied Films Laboratory, Inc. for manufacturing and supplying the world market in display coated glass for liquid crystal displays (LCDs).

Strategic alliances in the world of distribution allows access to orders that can be economically and efficiently produced also that generates reasonable profit through collaboration.

Cost savings has been realized my many organizations through shared locations such as Bank of America and many other banks across the country are that are locating branch offices in suburban and rural supermarkets. They are saving resources while simplifying the lives of their consumers by reducing the amount of their consumers’ daily running around.

Wal-Mart has a partnering alliance with Ronald McDonald. In many of their units across the country, proudly displayed, are signs on the store’s entrance doors announcing, McDonald’s inside and a life-size plastic Ronald, who sits inside on a bench to greet customers. Stores within stores have become commonplace through alliance relationships.

Another common location sharing situation seen across America is at truck stops. It is now common place to visit a truck stop and have a choice from two or three nationally franchised fast food chains. This also successfully achieves cobranding there by increasing the appeal of the particular location.

Financial Stability

Partnering in a poor economy or recession makes good sense especially, when sales are flat and prices are deflating. A while back, Continental Airlines accessed optical industry consumers by partnering with Swan Optical, Inc., an industry supplier, to increase business through an air travel discount certificate program for purchasers of optical frames supplied by Swan Optical.

Access to capital is a primary reason for smaller organizations developing alliances with larger ones. An example, Bruce Bendoff, CEO of Craftsman Custom Fabricators, Inc., Schiller Park, IL, a 275-employee sheet-metal bending company learned how to grow through trusting a corporate behemoth–Motorola.

More potential profit is generally the outcropping of shared resources. Achieving economies of scale is also possible in alliance relationships when partners share facilities, equipment and employees as mentioned above.

In strategic alliance relationships, prompt payment per agreed terms is increased, especially in customer/supplier alliance relationships.

Alliance relationships allow partners to share the financial risks associated with developing new products and entering into new markets.

Buying Parity with Giants

In the distribution industries, cooperatives, alliances and marketing groups are serving individual distributors well. In these relationships they can generally buy at prices far closer to the 800 pound gorillas than they could on their own. Today, most of the distribution industries have at least one of these kinds of organizations to help their members level the playing field.

Various collaborative organizations deliver additional discounts and services for in depth marketing and technical expertise. Win/win pricing becomes more possible in this kind of long-term buyer/seller alliance relationship.

To increase the health and potential growth for your business, consider alliance relationships to improve your cost savings, financial stability and buying parity.