Implementing a Strategic Partnership

Teaming with other entrepreneurs can expand your reach

0918_ENT_partnerships_ Book Cover“Anything we can do to share resources and prevent costs is what we [will do],” says Jones, author of Dare to Walk in My Shoes: Confessions of a Sole Queen (Jones; $14.95), a self-published book about entrepreneurship.

But for Jones, 37, whose store grosses $280,000 a year, strategic partnerships are a way of life. Since her first week in business she has held three to four “Shoe Soirees” at Sensual Steps and in clients’ homes every month. During her parties she advertises other businesses in exchange for complimentary products and services to offer her clients.  Plus, she regularly attends promotional parties thrown by other local businesses and sometimes permits them to hold events at her store. Though critics told her she was foolish, she has even gone so far as to co-market her store on flyers with other small shoe stores in the black community, saying that working together cut her advertising costs in half.

If your company is on the fence about whether to build a strategic partnership, take these tips into consideration:

Identify your competitors. By understanding the competitive space, partnerships can better decide what resources they will need to combine and in what ways.

In Jones’ case, Greenhalgh says that Sensual Steps and her strategic partners are marketing against the nationally branded stores and malls that pull customers and their dollars out of the Bronzeville community. By forming UB2, the Bronzeville store owners are showing residents that when they shop in Bronzeville they will benefit from a variety of stores and that everything customers want or need to shop for can be found in the community.

Ask yourself, what makes this partnership profitable? Creating greater value for the customer should always be the purpose for any partnership. “You need to look at what is going to sway the customer to do business with [your new team] as opposed to the competitor,” says Greenhalgh. Determine if profits will be made from one group project, or if the financial gain will come as a result of decreased overhead, fees, or energy expenditures over time.

Write a detailed plan. After you’ve come up with an idea, set up a meeting with the potential partners and explain what you want to do and how they will profit from it. “People are skeptical,” says Jones. “The more information you share the better.”  Outline how much money or the types of services that you expect them to contribute and estimate the return on investment for each partner.

Don’t lose control. Partnering with a company as opposed to a legal merger or acquisition is the difference between dating and marriage, says Greenhalgh. Every partnership you enter is a risk that can leave you liable since your partners can drop out at any time. Ascertain the legal ramifications of any agreement that you enter whether they are formal or not.

Consider forming a Limited Liability Partnership (L.L.P.). Under an LLP, all owners  have limited personal liability for business debts. Forming such a partnership will keep any one partner from being bound to the performance of others in the alliance.

Resources

Return on Investment Calculator – Predict the anticipated ROI for partnering with another company.

Promotion Calculator – Identify how much a particular promotion will cost you with or without partners.

Buyers Co-operative – Consider joining a buyer’s co-op which will provide cost savings.

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  • http://blackvegas.com John Harrison

    This was a very informative article. The power of your network and your friends and partners network is important. Gets back to the old cliche a “A Bird in Hand Beats Two in a Bush” Black business tend to let money walk out the door sometimes because of pride. When the end is near no one should realize it better than yourself. Being proactive and using the techniques in this article, might save your business. Good Job!!!

  • Suzan

    This article was not only helpful but motivational as well. The decision to partner with others created a choice to preserve the present and aid to the future success of our communities. What great vision and strategic planning. I am proud to spend my limited resources to promote the brilliance and success of the business featured.
    Suzan

  • Cornell

    It’s about time Sensual Steps was acknowledged for making a positive difference. I would like to say that each employee she selects acts with the same guided passion to make every experience a great one. The service is second to none and they even call you to let you know how much they enjoyed working with you. My wife was blown away by a phone call she received from one such employee and she raves about how everyone makes her feel special. Please continue the great job and I will continue to make sure her feet stays as happy as she is.

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