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.

Organic Coffee – Green Office Products

Eco friendly choices in coffee and office break room supplies include:

Fair Trade Certified Coffee Fair Trade coffees help farming families by paying a guaranteed fair, above market price for their harvest, thus providing them with a decent, living wage. This is accomplished by avoiding middlemen and dealing directly with farmers and their cooperatives. Not all Fair Trade Certified coffee is necessarily organic. However, Fair Trade Certified does require strict environmental stewardship such as prohibiting the use of genetically modified organisms (GMOs) and the most hazardous pesticides. All Fair Trade coffee must be certified by TransFair USA, an independent non-profit international agency that monitors and certifies Fair Trade products in the United States.

Certified Organic Coffee Certified organic coffee is grown without synthetic pesticides or other prohibited substances, according to U.S. standards for organic production and certified by an agency accredited by the U.S. Department of Agriculture. Organic coffee farming relies on sustainable crop rotation, and is mainly shade grown, producing delicious, pure coffees.

Rainforest Certified Coffee The Rainforest Alliance, an international nonprofit conservation organization, works in partnership with eight Latin American conservation groups to ensure that coffee farms meet a set of exacting standards that protect forests, waterways, soils and wildlife as well as the rights and welfare of workers and local communities. The standards require ecosystem and wildlife conservation as well as agro-chemical reduction. They also verify that workers have access to basic human services, such as health care, education, dignified housing and just wages. On average, workers on Rainforest Alliance Certified farms earn twice the local minimum wage. Farms that meet the standards are awarded the Rainforest Alliance Certified seal. Look for the Rainforest Alliance Certification logo with a small green frog on the packaging.

Green Office Products: Reduce, reuse and recycle office supplies. Supply office break rooms with biodegradable plates, utensils and eco container cups and lids.