Now, more than ever, business owners have started pursuing partnerships, affiliates, and collaborations with other businesses. Many business owners are starting to realize that it’s better to work alongside competitors or businesses in the same space, rather than fighting them for customers. On the other hand, some business owners aren’t so sure about working with competitors. So, that brings us to the question, what does a potential collaboration mean for your business?
Pros and Cons of Working With Other Businesses
Just like with every business opportunity, there are some pros and cons when working with a collaborator. It’s important to consider these pros and cons when thinking about starting a strategic partnership so you know you’re making the right decision. Below are some of the most common benefits and disadvantages of business partnerships.
Pro: More Exposure to New Customers
The main purpose of working with another business is to get more exposure to new customers. If your business doesn’t offer a particular service, a great partnership will open doors to a new audience you want to reach. Also, if your collaborator is in the same industry, the partnership can raise awareness about your business amongst their existing customers. Even with affiliates, the goal is to get the person or business’ customers or audience to work with you. Although not every partnership is successful, the likelihood is that you will gain more customers through working with another business.
Con: Different Processes Between Businesses
One of the biggest concerns about collaborations, and especially acquisitions, is the merging of processes. Every business has its own way of doing things. So, when another business steps into the picture, it can be a bit challenging to get everyone on the right path when working together. This is nothing clear communication and compromise can’t settle, but it is a major concern for business owners. So, before getting into a partnership, discuss their processes and consider how you two will work together. Come up with a plan to onboard each other and your employees so it goes as smoothly as possible.
Pro: More Services Being Offered
Oftentimes, collaborations enable you to offer more services to your audience. When you partner with another business in the same space, their employees and services can open doors for your own. For example, if you are a real estate software company and you partner with a graphic design company, you can offer your clients social media graphics, flier designs, and other marketing materials. This can help expand your audience as well as expand your earnings.
Or, maybe you’re a social media marketing agency and you want to partner with a website development firm. In this situation, you two are in the same space, being marketing. However, you two aren’t competitors and you share the same audience – people and businesses who need help with their marketing and public perception. With that being said, the best partnerships are those that help your business get in front of the right target audience.
Con: Public Relation Concerns
Another potential concern of partnering or collaborating with another business is from a public relations standpoint. When you partner with another business, it’s your way of saying, “We love this company and stand behind their services.” While this is an excellent statement when you’re behind a great partner, the opposite is also true. If the business you partner with is filled with public relations disasters, it negatively affects your business.
For example, imagine how the investors, affiliates, partners, and contractors of Enron looked at the time their scandal hit the news. While this is an extreme example that includes breaking the law, it goes to show how important it is to choose your partners wisely. But, if you know a business owner’s ethics and quality of services, and they give you a transparent look into their business, you will have nothing to worry about.
So, What Should You Do as a Business Owner?
You may be wondering, What does this mean for my business? It could mean one of two things. First, it could mean you should seek out a strategic partnership that benefits both you and the partner in question. Or, second, you should expand your own business because you don’t want to work with another company.
If your decision is the latter because of the concerns mentioned above or others, know that it’s completely OK not to jump on the collaboration train. It’s better to be safe than sorry if you do have concerns about choosing the right partner. Do keep in mind that every successful business has taken risks, so don’t completely write off the possibility of a collaboration down the road. When the time is right, and when you find the right partner, you will be thankful you kept your mind open.
On the other hand, if you are ready to collaborate with another business because you know the benefits outweigh the risks, it’s time to look into some potential partners or affiliates. What are some businesses that could complement your own? Or, who are some influencers in your industry that could drastically increase your exposure? Brainstorm, talk to your mastermind group, and consider who to reach out to.