How can you expand your business without spending money on new resources? What if you could accelerate your growth by capitalizing on what others have already built?
Executive coach Jay Abraham explores three types of strategic partnerships that can fuel business growth. He shows how forming the right connections allows you to access established customer bases, exchange valuable resources, and secure better supplier terms without starting from scratch.
Keep reading to discover practical ways to implement these partnership strategies and multiply your business potential with less risk and investment.
Strategic Partnerships
As you work on optimizing your operations, establish mutually beneficial relationships with other businesses. Abraham explains that forming the right business relationships can accelerate growth faster and cheaper than trying to expand on your own—because, instead of developing everything from scratch, you can leverage what other businesses have already built while helping them grow too.
Abraham outlines three types of strategic partnerships you can leverage for growth. Let’s take a look at each of them.
(Shortform note: Business experts refer to this type of mutually beneficial business relationship as a strategic alliance. Innovation expert, Rosabeth Moss Kanter, author of Think Outside the Building, compares strategic alliance relationships to marriage—like marriage, many strategic alliances fail to live up to expectations. In other words, both suffer from a high failure rate. However, echoing Abraham, Kanter argues that strategic alliances are more likely to succeed if businesses focus on creating strong foundations built on shared values and mutual benefits.)
Partnership Type #1: Customer-Sharing
Abraham suggests that you can leverage a customer-sharing partnership by asking businesses that already serve your target customers to endorse and distribute your products or services in exchange for a share of the profits. This gives you access to their established customer base without spending time and money building your own. For example, you might partner with a professional association and offer specialized training to their members. In exchange, you’d pay the association a percentage of the subscription revenue generated through their network.
(Shortform note: Customer-sharing arrangements seem to work best when both businesses target overlapping but distinct markets. The 2016 collaboration between Toyota and Uber demonstrates this approach: Toyota gained access to a new market of ride-share drivers without having to build its own platform, while Uber could offer its drivers high-quality vehicles at affordable rates. This partnership helped both companies expand their customer reach while serving their target audiences in ways they couldn’t achieve alone.)
Partnership Type #2: Resource Exchanges
According to Abraham, you can leverage a resource-exchange partnership by trading your assets, products, and services with other businesses for what you need instead of using cash. This helps you get maximum value from resources you already have while minimizing new expenses. For example, offer your unused office space to a media company in exchange for using their studio equipment to create video lessons.
(Shortform note: This type of resource exchange is commonly referred to as a collaborative economy. In addition to cost savings, a collaborative economy has numerous advantages over traditional buy-sell transactions. For example, it gives everyone involved greater access to resources and reduces waste since companies share existing assets instead of acquiring new ones they may not need in the long term.)
Partnership Type #3: Supplier Agreements
Finally, Abraham says you can leverage partnerships with suppliers by guaranteeing consistent business to key vendors to secure reliable service and better terms. This ensures you get the resources you need when you need them at the best possible prices. For example, you might promise regular work to your best course instructors in exchange for priority content creation.
(Shortform note: Supply chain experts add to Abraham’s advice, offering a three-step approach that will help you identify and manage your relationships with key vendors: 1) Identify what you’re buying, who you’re buying it from, and at what cost. 2) Classify suppliers into two groups—those integral to your business and those providing substitutable goods. 3) Focus on building long-term, mutually beneficial partnerships with integral suppliers. For suppliers of substitutable goods, look around to get the best deal but maintain good relations to ensure supply continuity.)
