For many SMEs, a strategic partnership might represent a tempting way to further the reach and capability of the business. They’re a means of creating growth, gaining a market advantage, and navigating particular challenges – among other things.
If you’re weighing the possibilities, it’s worth thinking about the key advantages.
Market reach
The right partner might allow you to reach into markets that would otherwise be inaccessible. This might mean crossing a national boundary, and making use of expertise and skills possessed by your partners that allow them to deliver products and services more effectively than you could.
For example, corporate lawyers might have a detailed knowledge of consumer regulations in foreign territories. With their help, you might be able to sidestep legal headaches and ultimately access an entirely new market.
Improving products
By collaborating with the right partner, you can deliver a product that’s superior to the one you came up with on your own. For example, if you’re selling kitchen cabinets, then you might work alongside a partner that specialises in high-quality mechanical hinges. This might lend you a competitive advantage, since your cabinets will end up closing much more smoothly than those of your rivals. If you make the partnership exclusive, then the benefits might be even more considerable.
Sharing Resources and Reducing Costs
Both parties in a partnership can benefit from economies of scale. In a sense, they might function as a single larger organisation. The closer the relationship, the more apparent the economies of scale will be. If each business specialises in a particular aspect of a production process, then the savings can be significant – provided that the two are appropriately organised.
Fostering Innovation
One problem that affects many SMEs is siloed thinking. When you work and collaborate with the same small group of people every day, you might become blind to new ways of doing things. A partnership can suddenly disrupt things. You might notice that the partner company approaches a problem from an entirely novel and different direction. With these insights, you can drive innovation in both partners, while disregarding practices that you don’t think you can learn any lessons from.
Accessing New Customer Bases
New partners might also be able to access demographic niches, too. In the modern digital economy, the most obvious way to do this is with the help of a digital influencer. You might have a product, and they have the audience. If they publically endorse your product, then their audience will perceive your product as valuable.
Endorsements can be direct – a product review, for example. Or, they might be indirect. Getting the right person to wear your t-shirt and post the picture can be highly lucrative!
