Getting into business bed with another enterprise could take your business to the top of the industry.
By Craig Falck for Africa Report
Photograph: © Solarseven | Dreamstime.com
When businesses partner up, it’s for a reason. That reason is to be the best in the industry and to make even more money. But they don’t just pick any other enterprise to join forces with – it’s a very calculated, thought-out and strategic action that takes place.
As always, the most important thing is preparation. Get your homework done and know everything there is to know about your industry, products and services, as well as your competitors and your complimentary enterprises and services. Once you know who you’re dealing with, it’s time to look at who it would make sense to partner up with. With strategic partnerships, both businesses must get something out. Draw up a business proposal that will detail why it’s a good idea for the businesses to join forces. In other words, show the other business why they need you. It might be a ‘buy from one and get a discount at the other’ type of deal that is guaranteed to bring customers to both.
If you can offer access to new technology or equipment, use this as a bargaining tool. In this way, the other business won’t have to source the equipment or technology themselves. By using the resources you already have, the other company is positively persuaded to enter into a business partnership. This saves them money by giving them access to your assets. Have a deal in place though, where you get access to their technologies and equipment that you too won’t need to source anymore. It’s a give-and-take relationship, and you both need to give and take.
If either of the enterprises is large and successful and the other is smaller, development capital can be offered to the smaller enterprise to assist in developing a technology, product or service in exchange for the first-option rights on it. While it may seem a bit unfair that the larger company obtains first rights while others in the industry have no access at all, you’ll be surprised at how many small businesses will jump at this opportunity. By obtaining an injection of development capital, the smaller company won’t need to worry about financing anymore as they will now have a market for their product.
Being in business with another enterprise can have benefits just by name association. For example, when Acer partnered with Ferrari, the demand for their Acer Ferrari laptops skyrocketed because it was considered a special item by consumers. If a pedigree company like Ferrari is willing to use a reputable brand like Acer for the marketing of products, it can only bode well for both parties concerned.
This partnership might be for the simple reason of attaining market control. By partnering or merging, the two companies will have greater control of the market and will then be able to dictate who, how, what and when anything happens in the industry. And, ideally, this is what any business wants.
Deciding to go into partnership with another enterprise can be a difficult decision to make. But sometimes it’s for the best, as these strategic partnerships tend to open new doors by allowing companies to segment their hold on their respective.
