Strength in Numbers: The benefits of forming strategic Partnerships

By Kathy-Ann Fletcher 

The saying ‘there is strength in numbers’ is no fallacy especially in business. To scoff at the thought of a strategic partnership is a misguided approach to business, as there are several things that may be harder to achieve as a single entity that would be accomplished through a collaboration of like-minded companies. I have heard the argument against partnerships due to the bounty having to spread further. However, using an arbitrary number, 1/5 of something is better than 5/5 of nothing if it gives you a profit on your investment.

There are some benefits to be had by joining a purpose-driven strategic partnership:

Becoming a key player – when you are a small player in an established field a sub-contract with a larger company or any partnership with an enterprise that is already well-known for quality is a great way to align your business with industry leaders and glean some of their reputation from them.

Market penetration in new areas – Similarly, aligning yourself with an established company is a great way to avoid some of the insecurity that accompanies your entrance into a new market. 

Further penetration in current markets - You can also see benefits from partnering with companies that cater to your same market. For instance, a high-end art gallery partnering with architects or interior decorators would benefit both parties by exposing them to new clients in their desirable target.

Get contracts you may not have landed alone – Due to your company’s size or some other consideration, you may not be able to land a major account. However, if you come together with one or more partners you could propose jointly to work towards the development of the account.  Each company could be assigned a different aspect of the project and everyone would profit from the high profile that would accompany such a large account.

A common goal – A strategic partnership of companies either by location, industry, or size will have a stronger voice for the issues within their area that they want to see changed. They may be able to advocate, for example, for more tax relief as a united voice than a group of individual voices.

While it may be easy to think of the risk to your competitive advantage of a strategic partnership, I believe that the above benefits can have a stronger play on whether you enter these agreements.

The list is not exhaustive. What other reasons for entering such arrangements that you can think of? What would discourage you from entering a strategic partnership?