By Sherron Lumley.
Frank DeSantis, owner of DeSantis Photography, has spent 15 years in Philadelphia and Portland building small business alliances to move his commercial photography business forward. “It’s perseverance really and it’s not instant gratification. Business is about developing relationships. I’ve always known that and been open to experimenting,” DeSantis says.
The relationships he refers to amount to a series of informal collaborations, where two or more companies work together toward mutual objectives, sharing both risk and reward. Working with a core team of small business owners can create a synergy where the sum of the whole exceeds what each individual business can do on its own.
These alliances tend to come in three flavors. The first type resembles David-and-Goliath proportions, where a smaller company joins forces with a much larger strategic ally, with the intended benefit of adding credibility to the smaller organization. Then there are the informal partnerships between two very large, but non-competitive companies, which often come together to co-market or cross-promote each other’s complementary brands. And finally, in what might be called David/David alliances, two smaller companies, both with limited resources, come together to leverage off each other’s strengths on a peer-to-peer basis.
Pull-Quote.pngFor example, the traditional way to promote a business, through the channels of marketing, advertising, and public relations can be prohibitively expensive to even mature small businesses. But by teaming up with other similarly sized companies in a David/David kind of arrangement, the costs can be shared, helping the companies to overcome an otherwise insurmountable financial barrier to entry. But it’s not just about sharing expenses and saving money, forming an alliance is also a way to strategically grow sales contacts, cross-pollinate expertise, develop new markets, gain distribution channels, and build new technology and manufacturing.
Build cross-industry strategic alliances through networking
“Networking takes a lot of time,” says DeSantis, “and even though you may think it’s a waste of time, it’s not. Nothing will come out of it that day, but week after week, month after month you’re befriending other people in the business community and earning their trust. Eventually it comes through,” he says.
DeSantis has shared direct mail campaigns, web blasts, and events, as well as formed alliances with hair stylists, jewelry makers, graphic designers, web designers, printers, and marketing professionals. “Then I put myself out there to doctors, doing portraits for their websites and pictures of procedures,” he says. Next, he is considering an alliance with lawyers.
DeSantis joined Business Networking International when he moved his business from Philadelphia to Portland several years ago. “One of the people I met at that networking group refinishes floors and that led to doing photography for him that moved his business up a notch,” he says. DeSantis then joined the Oregon Remodelers Association and the National Association of the Remodeling Industry, which led to more business. “Whatever it is that you want to be doing, that is where you need to go,” says DeSantis, who specializes in architectural photography.
“Real entrepreneurs understand the fundamental power of networking—connecting to like-minded individuals and helping them connect to others,” says marketing expert Mitch Joel in his book Six Pixels of Separation. “You network to build your circle of influence by adding value to your community and helping others get value they want.” The idea, he says, is to become the go-to person for the community.
Join professional trade organizations
The best strategic alliances result from a cooperative culture and spirit among the participating small businesses. These bonds lead to trust, resource sharing, and a friendly chemistry among the parties, says strategic alliance consultant Andrew Sherman in Grow Fast Grow Right.
Ken DeLoria, owner of DeLoria Technical Services, runs a professional audio business specializing in live sound for musical concerts as well as high-profile TV events such as the Super Bowl, the Grammy Awards, and the Academy Awards. “I network as much as possible to stay on the radar with event planners, production companies, and sound rental companies,” says DeLoria, who is a member of the Audio Engineering Society (AES), the professional trade organization for his industry.
“The pro audio business lives and dies on relationships,” DeLoria says. “Almost every day of my life I’m sharing information and contacts. It’s a never-ending thing,” he says. It’s a tactic that has served him well. “In my business, it’s a combination of being technically competent, easy to work with, likeable, skilled, and sharp that results in trust and confidence in our advice on a major sound system that will cost millions of dollars,” he says.
Co-promotion can be a fast track to brand recognition
Establishing brand awareness can seem like a daunting task for small businesses, but those companies aiming for rapid growth can defray the heavy costs involved by sharing the expense with other businesses. “Strategic alliances bring added value, economies of scale, and broader customer recognition to the small business involved,” writes Sherman.
For instance, 17 years ago, DeLoria expanded his business from sound production to designing custom sound systems, which he commonly promotes at major industry trade shows across the country. But he found that shipping these large pieces of sound equipment—which often require a semi truck to accommodate them—can run as much as $30,000 or more. Thanks to the strategic alliances he’s since built with industry manufacturers, however, he’s able to defray these costs by using the sound equipment they already have on-site at the trade shows. DeLoria then cross-sells those same equipment brands in his trade show pitches, lending those products an air of being an expert’s choice.
Does an alliance require a contract?
For informal business alliances, a binding legal document might not be necessary, although talking over the arrangement with a lawyer is nonetheless a good idea as he or she may point out unforeseen consequences of the venture. However, if your company will be licensing the use of its patents, trademarks, or intellectual property rights and, conversely, if your business will be promoting those same rights from another business, the American Bar Association recommends seeking legal counsel. Of course, for formal business alliances, such as joint ventures or partnerships, it’s a must to have a thorough legal review and to put any agreement in writing, where it should be spelled out to all parties what is being shared and what is not, and how the process for exiting the alliance will work. And if strategic alliances, even informal ones, lead to doing business in other states or countries where you’re unfamiliar with the local laws and regulations, it’s a good idea to talk to a lawyer as well.