Most entrepreneurs are stubbornly independent by nature – it helps them survive. However great results can come from pursuing strategic alliances with like-minded firms, in terms of both finding exciting ways to serve existing customers and entering new markets.
Doug Burgoyne, Costco member and founder of Vancouver, BC-based Frogbox, knows firsthand how having a strategic partner can open up a world of new opportunities. After finding success renting plastic boxes to movers as an environmentally conscious alternative to cardboard, Burgoyne knew that over time he could repeat his model outside the Vancouver market.
Burgoyne’s expansion plan received a boost after embracing 1-800-GOT-JUNK as a strategic partner. “It was a matter of thinking big and not being intimidated to present the company to one that is 10, even 100 times bigger,” he says. “After all, big corporations look for added benefits as well.”
Ultimately, Frogbox was able to launch its Seattle operation 50 percent faster than Burgoyne initially planned. “We’ve been able to leverage our partner’s skills and experience to more quickly ramp up business in Seattle,” he says. “In return our partner is now able to offer his customers an eco friendly service when they are moving. “
Of course, pairings of this nature rarely happen by chance – they take determination, consideration and action.
There has to be a good fit with congruent values, explains Dallas-based Costco member and business coach Ann Ranson. “This requires knowing your own strategy, target market, goals and objectives,” she says. “Followed by doing the research to find other companies that might be a match. You want to be sure that you also share similar values and ethics.”
Likewise, the individual offerings must pair well. For instance, Frogbox’s alliance works because a noticeable percentage of each firm’s clients can see benefit in what the other offers. The goal should be finding complementary partners to offer something new to your clientele while also allowing you to serve new audiences.
According to Erin Blaskie, Costco member and founder of Business Services Etc., success comes to those who embrace creativity while taking the initiative to present their case to prospective partners. “Always put together a plan that outlines the steps and the pieces for them so it was a no-brainer on their end,” says Blaskie, whose Kanata, ON-based firm provides an array of professional services designed to help companies solidify their online presence.
For instance, when Blaskie recognized the potential in partnering with Boise, ID-based help desk software developer Kayako, she established a simple yet effective framework sure to attract COO Ryan Lederman’s attention. “They provide a software that our clients need to help them manage their customer support,” she said. “We showed how forming a relationship would provide more value to our clients, while providing Kayako with an active and targeted potential customer base.”
However, before approaching Kayako, Blaskie tested the software in-house to be sure it would meet the primary issues of her existing clients. After all, doing the homework in advance helps in forming realistic expectations. “Plus when an alliance is kept simple, it can be very effective and won’t cost you a ton of your time,” says Blaskie.
While forward momentum may spark the desire to act immediately, Ranson stresses the importance of having a very clear agreement in place spelling out the roles for each party. “Do not even think of engaging a single resource until you do have a signed agreement,” she says. “Having an agreement in place helps eliminate unknowns and provides a level of security for each party.”
Once an agreement is in place, promotion should be one of the benefits of the newfound synergies and the combined resources. “Tight budgets are one of the reasons that an alliance makes sense,” says Ranson. “Maybe one partner has marketing money while the other has manpower to help initiate a grassroots type of campaign.”
Planning out an effective marketing program should be one of the first joint activities, explains Blaskie. “Be sure to consider casual and structure marketing avenues (social media, new client collateral, etc.),” she says. “Regardless, the goal should be finding and leverage cross-promotional opportunities that make both parties more attractive to their clients.”
Sidebar: Common pitfalls
Expecting everything– Always temper expectations. “The goal of entering an alliance should be to find sustainable congruencies capable of yielding long-term mutual benefits,” says Ranson.
Holding back – Find a level of comfort in sharing. “Trust is instrumental in making it through the tough times, and establishing a genuine relationship,” says Burgoyne.
Festering feelings – Immediately address issues. “Festering problems or concerns will destroy an alliance quickly,“ says Michael Brooke, Costco member and founder of Thornhill, ON-based Concrete Wave.
Winging it – Demonstrate clear value in making a proposal. “If it’s too lopsided your way, it just turns into another sales pitch,” says Burgoyne.