Tuesday, April 23, 2013
Build Your Business by Forming Alliances
How do you grow a business when you simply don’t have the resources to focus on new opportunities? How do you attract new talent that can bring new business without adding a financial burden to your organization?
Forming business alliances is an approach that is being used today to meet these challenges.
A major retail grocery chain uses an alliance to provide sushi bars in its retail stores. The grocer contacted a small sushi catering service and asked if the caterer would be interested in finding individuals to set up sushi bars in the retail stores. In return the grocer would use its buying power to provide sushi ingredients at the lowest possible rate and keep track of sales through its registers. Further the grocery company would subtract the cost of goods sold and simply pay the caterer a percentage of the profit of each sushi item sold.
The caterer found a source of individuals willing to set up and man the sushi bars in the grocery stores by forming a subcontractor arrangement. Essentially the caterer provides training and quality control to the subcontractor for each store and shares the money from sales with the sub contractor.
The results have been very significant. The grocer has sushi bars in 200 outlets and is very happy with the product quality, sales volume and customer service the caterer has provided. This was accomplished without having to hire new employees or incur other expenses associated with adding a new service to the grocery operation.
The caterer was able to expand his business without taking on additional financial risk and the business has been so successful he has a waiting list of quality subcontractors to start sushi bars in grocery stores.
This program has been so successful the grocer is now looking at other services that can be added to the retail outlet using the same model.
Consulting Service Opportunities
A well-established accounting firm wanted to expand its consulting business without increasing the costs associated with attracting high-powered consultants from a wide range of industries. The consulting firm created teaming agreements that allowed small consulting firms to work with the larger firm.
The small consulting firm would have the ability to offer a full line of consulting services and would be supported by the larger consulting firm’s staff. The larger consulting firm would have the benefit of the smaller consulting firm’s contacts, relationships and new business opportunities.
As a result the smaller consultants were able to call on major clients and offer services without taking on additional cost for expanded support staff. The larger consulting firm, as a result, generated more sales and had the expertise of consultants from a myriad of industries without the associated employment costs.
Technology Sales Opportunities
A technology company that provides ground breaking teleconferencing display hardware uses relationships with technology sales organizations to market their products. The technology company is able to reach new markets and customers by tapping into the sales organization’s contacts and established relationships.
The sales organization’s ability to offer its clients the latest in teleconferencing hardware enhances its ability to create new revenue streams.
As a result the technology company has had its equipment exposed to new industries and is experiencing strong sales growth.
Steps to Creating Successful Business Alliances
To create a successful business alliance all partners must benefit. Here is a checklist to follow when considering forming a business alliance.
1) Make certain the partner has the skill sets and ability to deliver agreed upon goods or services. A test project may help determine each party’s capabilities prior to forming a long-term relationship.
2) Be sure to clearly define each party’s responsibilities and obligations at the outset of the relationship. This should be a written document that covers normal operating procedures, revenue and expense allocations and how out of the normal situations will be handled.Finally, the ability for each party to end the relationship should be agreed upon in writing.
3) Develop a business strategy. A plan should be designed that shows how each member of the alliance will benefit and outlines their role in creating business opportunities that benefits all alliance members.
4) Set regular meetings with alliance partners. Meetings should be held regularly to review the progress toward achieving desired results and to discuss new programs and opportunities.
5) Terminate the alliance if it is not working. Everyone hopes for success in a newly formed alliance but there will be some alliances that will not be productive. It is better to terminate a program that isn’t working rather than continue putting effort and resources in an unworkable program.
As the global economy expands, building business alliances will become an important tool to create and develop new business opportunities. Choosing the right partners and alliance operating procedures can improve the chances the alliances will have a successful outcome.