Small businesses can have their expansion and revenue growth inhibited by a lack of working capital or a low appetite for risk. However, there is a way to tap into progress by developing strategic partnerships with larger organisations for mutual benefit.
What is a strategic partnership?
A strategic alliance with an enterprise whose capabilities are complementary to your own can deliver access to new ideas, markets and sales channels, or help you to reduce risk, or allow you to share facilities, infrastructure and intellectual property.
While you are probably already a member of your local Chamber of Commerce, you could consider joining a statewide or national group for your industrial or commercial sector, such as the Queensland Farmers Federation or the National Retailers Association. You will gain access to informative online articles, important industry events and advice about best practices and new products or services.
As well, you could choose to partner with a complementary business, for example a local bridal wear boutique creating an alliance with a national florist network to access their customer base and offer discounts for combined purchases. Or a small plumbing service collaborating with a large plumbing parts manufacturer in order to become their local or statewide distributor.
Stimulating the local economy
You may be wondering what large corporations have to gain from a partnership with an SME. The fact is, the benefits are not one-sided. It’s in the interests of big business to keep the Australian economy strong and growing, and regional Australia presents them with plenty of opportunities to do exactly that. After all, 57% of Australia’s exports come from agriculture, mining, forestry and fishing, enterprises mainly found in rural and regional Australia, and it’s vital to maintain population and job opportunities in those locations.
Regional Australia offers room to grow
Relocating previously centralised facilities to the regions encourages local businesses who can partner with and service them, creating both direct and indirect employment. There’s plenty of land available at prices far lower than those found in state capitals, and usually a readily available workforce, making it a cost-effective option for major corporations. Decentralisation also reduces the stress on our overcrowded cities.
Qantas, for example, opened a pilot training academy in Toowoomba in January 2020, not the best timing in hindsight, but it’s still operating. Surfing sportswear company Ripcurl has its head office in Torquay, 21 km south of Geelong in Victoria.
Opportunities to reach new customers and markets
Perhaps the major benefit for SMEs when they partner with larger companies is the access it gives them to new customers. Pairing with another company opens up their client base to your products, and works well as long as you are not in direct competition with each other. A fresh produce supplier to a major supermarket chain could offer to showcase its products in-store at a pop-up taste-test counter, possibly increasing its revenue not only from direct sales to shoppers but also by exposure to other potential distributors.
Your business partner could even operate in a sphere completely different from yours. The supermarket produce supplier already mentioned could collaborate with an events organiser to provide free or low-cost healthy snacks at trade shows or conference tea breaks, opening up a promising new market. A business could have one alliance, or several. The possible combinations are effectively endless.
Ready to grow via a strategic partnership?
If you are feeling inspired to ally your business with a bigger partner (or even one about the same size as yours) but lack the working capital needed to spread your wings, why not discuss your finance options with your broker? We’re always ready to help with advice.
Original post by Bank of Queensland