Most successful entrepreneurs know the importance of focusing on the one thing they do very well. But focusing in this one area can have its downsides. It’s inevitable that business owners will wonder, at one point or another, how they can maintain expertise without overlooking new opportunities that could be relevant to the company’s future success.
To tackle this challenge, small business owners and leaders need to establish alliances with other companies. Here are 10 steps to help establish a strong foundation for your strategic alliance:
1. Get your own house in order. No one expects your business to be perfect – after all, no company is. However, even before you begin your search for potential allies, keep in mind that partners will look for tangible signs that your company is stable, innovative and provides some quantifiable value. As a result, your pre-alliance to-do list should include making sure you can demonstrate that: (i) your financials are well documented; (ii) your profitability or revenue is trending upwards; (iii) your leadership team is committed to staying; (iv) you have invested in new products, new technologies or new markets; and (v) you have a clear sense of your company’s core strengths and weaknesses.
2. Be prepared to walk away. As much as having the right strategic allies can catapult your business into new areas, having the wrong allies is 10 times worse. That’s why it is crucial to take the time necessary to “test the waters” with a potential ally. For example, conduct a time-limited and low-risk project where you can see how well you work together. Also, make sure that you spend time getting to know your potential partner inside and out. In other words, make sure that they have their house in order. By conducting these simple steps, you will identify if there is a potential fit or whether you should walk away.
3. Be prepared for the long haul. Regardless of the details of the alliance, keep in-mind that this business relationship is going to extend well beyond a few months. That means you should plan to allocate time and resources to nurture and maintain it. As a result, build specific responsibilities for growing the relationship into at least one person’s job description.
4. Set measurable goals. Prior to entering any alliance, identify exactly what success means. For example, you might define success as a specific number of introductions to new prospects, the amount of money saved on a particular initiative, or the total new revenues generated during a particular time period. Regardless of the goal, make sure that you have some means to measure it. Also, keep in mind that success will ultimately be defined by three goals –one that you set for your company, one your alliance sets for their company and a jointly-defined goal that both of you will monitor.
5. Identify potential stumbling blocks. All alliances go through growing pains. To minimize such pains, sit down with your leadership teams to identify those practices that are most likely to hamper the success of the alliance. For example, many alliances involve sharing customer/client information. As a result, both you and your ally need to have processes for collecting, analyzing, sharing, storing and discarding information that protects customer/client privacy.
6. Document for clarity. Alliances built on a handshake fail. That’s because good intentions ultimately fall by the wayside over a period of time – particularly when there is tremendous success or failure to share. As a result, while your alliance should have a straightforward charter that clearly describes the core benefits for you and your ally, also develop documentation that identifies what happens as the relationship grows or deteriorates over time.
7. Tap into relevant advisers. To help increase the success of your alliance, seek out the expertise of professionals who understand your company, your industry and alliance building. That means, in addition to gathering guidance from your accountant and lawyer, draw in expertise from professionals who have sustained effective cross-functional teams because they understand how to combine different skills, learning styles and processes.
8. Communicate early with key stakeholders. Some of your clients, existing partners and employees may be alarmed by your new alliance. To minimize and address potential resistance or negative fall-out, implement a communications plan that has you speaking to stakeholders who will be most uncomfortable with your new alliance. For example, make a special point of meeting one-on-one with your top 10 clients (B2B), existing partners, and influential members of your industry’s media.
9. Build your skills. Building and maintaining a successful alliance rests largely on the shoulders of the business owner/senior decision maker. But having the business acumen required to identify a strong alliance is not enough to make your alliance work. You will need to bring to the table a host of key interpersonal skills including: active listening; reading people; negotiating; resolving conflicts; and empathizing.
10. Do your homework. Contact your local chapter of The Association of Strategic Alliance Professionals. This not-for-profit helps businesses – regardless of size or industry – that rely on complex partnerships to achieve core business goals.
Over the last 15 years, research from across the globe on strategic alliances generates the same shocking results: the failure rate of alliances is between 55 per cent and 70 per cent. Take these steps and you will lay the groundwork for a long-term, successful and profitable alliance.
Andrew Brown has helped leading companies in 15 industries significantly grow their revenues and strengthen their reputations. He has launched and promoted over 150 products/services by developing successful alliances and client engagement strategies that harness all traditional and digital marketing tools.