How to partner with other companies to expand your business

As your company expands and your market share grows, it's important that the business plan — and your company itself – adapts, which is why you need to plan and implement a strategy for growth.

A well-drilled strategy will allow you to get ahead of the competition, as well as ensure that your business is equipped to withstand the unavoidable tough periods faced by virtually all businesses.

Expanding a business can be difficult, but it's not impossible. One of the best ways to grow your business is by establishing a relationship with partners or investors to equip your company with material resources and talented human capital.

Consequently, if you make the wrong choices, the result of this could be fatal for your business.

In this blog post, we'll cover topics such as what to look for in a partner company, how to form the partnership, and what benefits you can expect from it.

The most important question

To get started, let's address the key question: what are the goals you hope to achieve by bringing in partners or investors into your company?

To answer this, you need to define your needs and determine why you're considering bringing on partners or investors before you begin.

Do you require cash or is there something else missing in your company?

For instance, you can raise money in different ways instead of partnering with another company, such as loans or selling equity.

However, partners can bring something more valuable than money, like new talent or productive capability.

Borrowing money might be expensive, and selling equity has an impact on your company's independence.

However, bringing in a partner will inevitably affect the way you run your firm. There are expenses associated with each choice — both monetarily and in terms of how you manage your business — to consider.

Overall, if you first lay out your reasons for considering raising funds or collaborating with others, you'll be much better equipped to complete the rest of the plan.

What to look for in a partner

The next step is to assess how well you'd work with the ideal firm.

The qualities your partner should have are the next step, and you should be able to respond yes to the following questions:

Do you know your potential partner well?
Do you and the other company have experience working together?
If so, do you have a good synergy of abilities, culture, strategies?
Do you have confidence in your potential partner's abilities?
Do you and your potential partner communicate well?
Do your working styles complement each other?
Do you see a partnership as a positive step?

Finding a common interest

Demographic or geographical relationships are among the most popular.

The question to ask is: "Is there a firm with a product or service that matches with my target audience, and can I partner with them for a win/win situation?"

Let's take the wedding industry as an example. Let's say a catering service holds a tasting event once every couple of months.

In this scenario, the business can work together with local florists, photographers, wedding planners etc., and by acting as a one-stop shop for couples, every vendor wins.

How to form the partnership

It may appear daunting at first, but forming partnerships isn't as difficult as it appears.

Start by looking for a shared customer or audience.

After you've found a company that matches the bill, contact them and begin communicating.

Then, respond to the following questions for your potential partner:

What can we package together to save money?
How can we collaborate to expand our reach?
What resources can we offer to each other?
How is this a win-win for both sides?

The last question, by far, is the most crucial. In order for an alliance to operate, there must be a win-win scenario.

There's always "consideration," which is a value traded between both parties - nobody receives anything for free.

Strategic benefits

By means of a formal contract or an agreement in good faith, partnerships may take on many different shapes.

The finest are entirely voluntary and can be formed in the form of real-world partnerships or solely online.

Consider the following partnership options, some of which have practical strategic benefits:

Sharing marketing and advertising efforts
Sharing trade show booth space
Co-authoring presentations
Co-branding promotional products
Offering referrals (with or without commissions)
Redirecting business to each other’s Websites
Becoming “certified” by another company
Forming “preferred supplier” relationships
Integrating with noncompeting parts of the supply chain
Sharing information and advice

The bottom line

Building a long-term partnership with another firm has a lot of benefits, without question.

Take the time to properly manage expectations and goals from the start. That way, you may reach out to new audiences and untapped profits.

Is your business looking for funding? Start the process here.

About SME Capital

SME Capital was founded to support the growing number of SMEs who face difficulty or frustration in accessing capital through traditional methods. We understand the importance of real and trusted relationships in the SME lending market, and have dedicated Regional Directors based across the UK. By combining traditional lending expertise with the latest in data analytics, we are supporting established UK SMEs with their long-term objectives and business ambitions.

The Market We Serve

SME Capital provides SME funding for businesses which are integral to the UK economy. We support UK businesses able to demonstrate recurring revenues and a track record of profitability. They often have unique needs that fall between traditional lending routes and the automated response from online only business loan lenders. We cater to businesses with strong cash flows, assessing each business on its strengths, rather than focusing on the asset base.