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How Strategic Partnerships Can Benefit Small Businesses

Small Businesses

If you own a small business, you will likely do anything to keep your business in the black. One of the best ways for a new or experienced company to expand its business is through a strategic partnership.

Also known as a strategic alliance, a strategic partnership is an arrangement in which two companies undertake a mutually beneficial project while remaining independent from one another. There are many reasons a company might consider a strategic alliance and they can be short-term or long-term as well as formal or informal. 

You might be wondering how a strategic partnership can help your small business. Yes, but you might want to read on before making the full commitment. 

Kinds of Strategic Partnerships

There are three types of strategic partnerships on the table for businesses to consider. 

They include joint ventures, where two companies combine resources to accomplish a specific objective while remaining separate business entities and are responsible for their costs and profits, equity strategic alliances, where one company purchases equity in another company and vice versa, and non-equity strategic alliances, where two companies sign a contract to combine resources but don’t share equity or create a separate entity. 

Figuring out what is best for your small business is going to be the first step.


You can see examples of strategic partnerships everywhere you look, says Jorge Vivar, Creative Director of mode. “If you have seen a bank inside a supermarket, that is a physical example of a strategic alliance and you probably didn’t even realize it.” 

That Starbucks you went to while shopping at Target? That’s another one! Spotify and Facebook currently have one and it has led to huge growth for the music streaming service ever since. Your business will likely have trouble collaborating with Facebook, but the chance for explosive growth still exists.

Benefits of Strategic Partnerships

“Partnering is the quickest, most effective way to re-engineer a business,” says Curtis E. Sahakian, VP of Business Development at Mercantec. Let’s dig into some of the best benefits a strategic partnership can provide your business.

Reach New Customers

Maybe the biggest benefit of a strategic alliance is the access it gives you to new potential customers. Jake Langley, CEO of Luma Nutrition says, “A strategic alliance is the best free advertising you can get. You instantly receive access to your partner’s customer base.” 

Pairing with another business allows you access to everyone they do business with since you will now be affiliated with their brand. This automatically increases the number of leads you can try to convert, which essentially doubles your potential clientele instantly. 

“Imagine a way to establish your credibility, reach new customers, and demonstrate your value immediately. That is what a strategic partnership can do for you and your business,” added Mehdi Marrakchi, CEO of Mob Hookah. “The brand you partner with is vouching for you and you are vouching for them. It’s a real win-win.” 

“It’s about trust,” says Amaury Kosman, CEO of Circular. “You can grow your reputation with customers, vendors, and other professionals. That’s what people forget. This isn’t just for the potential new customers; it’s for the professional relationships you stand to gain, too.

Reach New Markets

Consider what market your partner exists in. Your partnership might expand your audience in your current market or introduce you to a whole new one in a complementary industry. “If you are looking to add some variety to your customer base, an alliance can have massive benefits,” says Daniel Tejada, Co-Founder of Straight Up Growth. 

Think about companies that start to penetrate global markets. In China, an American company has no name recognition, making them untrustworthy to some in that market. If an American company can enter into a strategic partnership with a Chinese company, it will benefit from the partnership and win the trust of the Chinese company’s customers without having to penetrate the market alone. 

For a small business, this might be something more like a company that sells coffee partnering with a local barista. If customers see the coffee brand being used, they will be more likely to order it and try it out at home.

Resource Sharing

“Look at Disney and Pixar. Pixar was [Steve] Jobs’ animation company with no method of distribution. Until it partnered with Disney. It was a perfect fusion of product and resource and both companies have benefitted tremendously,” says Sumeer Kaur, CEO of Lashkaraa. “Ideally, your strategic alliance will combine the best of what both you and they have to offer.”

 The best your company might have to offer could be a great product while theirs is great marketing knowledge. Before you enter into a partnership, you should make sure the other company will be filling a gap in your knowledge. It is also important to consider an alliance when you are trying to expand your company’s production capabilities. If you are entering a period of growth but are unsure how to scale, consider teaming up with a company that can help you reach that next level.


All of the aforementioned advantages of strategic partnerships should translate to increased revenue, according to Joshua Chin, CEO of Chronos Agency. “Obviously, the best outcome is an increase in sales. That isn’t to say that resources and expertise aren’t important, but if you can take advantage of all the benefits of a good alliance, you should see your revenue grow during or after it’s finished” 

Revenue doesn’t have to be the primary goal of a partnership, but if you enter into one and see no increase in profits, it might be time to reconsider. Remember, the partnership is supposed to be mutually beneficial and you should be seeing an ROI to make your investment in their company worthwhile.

How to Ensure Success

Before you dive headfirst into an alliance, you need to be sure that there are mutual benefits. “Alliances can be tricky… You need to date and get to know each other,” says Nina Kaufman, CEO/Founder of Kaufman Law PLLC.

 Here are some rules to follow to ensure your strategic partnership is successful.

 Identify Need & Evaluate Partners

Before entering into a partnership, both companies need to determine why they should work together. Know your strengths and weaknesses as well as the companies that you are considering partnering with and determine how you two fit into each other’s business plan. Know what it is you are expecting to get out of the partnership and be clear about it upfront.

 “Evaluate your potential partners by asking important questions. ‘Where are we going to clash? Who is in charge of payments? Do we share similar company values? How are decisions being made? What is their work style?’ These, as well as many others, are going to dictate the success of the partnership. Don’t dive in without a thorough evaluation,” says Ricky Nariani, President & Co-Founder of WANTED.

Define Objectives and Responsibilities

Both parties need to be clear on what the other expects to gain. Expectations need to be realistic and well communicated. The relationship will sour if it feels one-sided. You should know upfront who is responsible for what. What are your strengths and what are theirs? Be specific so that when a conflict arises you know where to turn for answers or solutions.


Communication is the key to any relationship; personal or professional. Don’t overlook this key component of a strategic alliance, says Jared Hines, Head of Operations at Acre Gold.

 “You can avoid misunderstandings and disappointment by simply communicating with one another, Hines says. Companies should be honest about progress and open to recommendations for improvement. “These should be done regularly to ensure everything is running smoothly and as expected by both parties.” 

Be Ready for Conflict

“No relationship is perfect. There are always going to be conflicts that arise no matter what you do”, says Cole Steverson, COO of Hybrid2Go. “When they happen, make sure you are ready to handle them.”

Have a plan in place to address misalignments and have an open conversation. Don’t focus on placing blame. Instead, be solution-oriented and ready to walk away if need be. Don’t let your company be caught off guard if a split occurs. Enter the agreement with an exit plan in place so you can ensure a smooth transition back to independence. 

Be Patient

Rome wasn’t built in a day. Partnerships take time to pay off and maintain. Keep focused on your objective and check in regularly to see if goals are being met. If you have given enough time and are now expecting a payoff, then you can start to reconsider.

 Strategic alliances are a great option for small businesses but they should not be entered into lightly. Assess and reassess, then make a well-informed decision. Once you have, watch how quickly both companies reap the benefits.

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