101 Strategic Alliances
Stuck in a rut? Having difficulty reaching new customers or increasing profit margins?
You could go the merger and acquisition route, but before taking things to that extreme, you may want to consider a strategic alliance or two. It will offer added marketability, flexibility and most importantly, it will give you an edge without sacrificing independence or ownership percentages.
Julie Bick, author of “Growing Your Business” and contributor to Entrepreneur.com, shares some advice on the topic, which should help you stay the course when choosing your next corporate allies.
Study up. Taking time to research what you have and what you’re looking for will pay dividends down the road.
“You should know exactly what traits your ally needs before you start looking for one,” Bick says. “Check a potential ally’s credit rating, financial reports and reputation in the industry, but trust your feelings when it comes to the final decision.”
The art of negotiations. Remember to be fair, open and honest.
“Carefully and frankly communicate expectations, along with the ways performance will be measured,” she says. “Describe what and when each party will invest, as well as expected returns and how any disputes will be resolved.
“Don’t just negotiate to get the best for yourself,” Bick continues. “If the other side thinks the deal is unfair, they won’t put much effort behind its success.”
Plan for failure. Keeping expectations in check and understanding what’s involved will help you avoid an unsuccessful alliance.
“Many alliances are based on hoped-for savings, but alliances involve inevitable costs,” the author says. “Management time is the biggest one. Underestimating the amount of time it will take to manage an alliance is a common cause of failure.”
Pulling the plug. Alliances won’t last forever, so it’s best to have a plan ready when that day comes.
“Don’t forget to devise an exit strategy. It’s a serious mistake not to have a comprehensive plan for ending the alliance,” Bick says.
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