Why Small Business Collaboration Is Key to Growth
Although some may think starting a business often means going it alone, the reality is quite different. Collaboration is vital to the health and success of any business today. As neighbors and friends, it’s our natural inclination to look out for each other, and the world of business can be no different. There are many ways in which small-business owners can join forces and learn from each other, exchange ideas, increase purchasing power and grow revenues.
Here are just some of the ways that small business collaboration can help you grow.
Collaborate to Learn
Because you may need to wear many hats, it can be enormously beneficial to learn how other business owners are running their operations. Whether it’s marketing, accounting, sales, HR or gaining access to capital, there’s much to learn from each other’s successes and failures. Look for local in-person networking groups and incubators, as well as online resources such as LinkedIn and trade forums, to gain insight.
Collaborate to Be Inspired
When you’re running a business, you can sometimes develop tunnel vision. You’re so focused on the day-to-day tasks that it’s hard to step back and see the big picture or explore new ideas. Seeking out and maintaining the company of other businesses can be a powerful source of inspiration and support.
Check out the Small Business Administration’s nationwide network of Small Business Development Centers or your local chamber of commerce — many of which host “Breakfast Eye Openers” that combine networking and a presentation from a featured speaker.
Collaborate to Increase Your Buying Power
Small businesses are often at a disadvantage buying from distributors and wholesalers when compared to larger businesses that have bulk buying power. But when small businesses work together, they can compete on a more level playing field. For example, by forming purchasing cooperatives, small businesses can partner with each other to aggregate their purchasing power, reduce costs and realize economies of scale.
Collaborate Through Co-Opetition
Ever heard of co-opetition? It’s what happens when two competitors come together to work on business opportunities. This doesn’t mean joining forces with a company that goes head to head with you; co-opetition can work when complementary businesses cooperate to promote their mutual products and services.
For example, if you own a hair salon, you probably wouldn’t partner with another salon across town. But, you could team up with a nail bar or massage therapy business for your mutual benefit. How? It could be as simple as leaving a brochure at the checkout of each other’s businesses or sharing promotional information on social media.
Another option is to co-promote each other’s products. A pet store could offer a discount on leashes and collars to anyone who booked an appointment with a local dog walker — and that walking company could offer a reduced fee to anyone who made a purchase at the store.
Take it one step further and host a special event together. Whether it’s sharing a stand at your local street market or hosting an exclusive event for customers at your place of business, this is a great way to expose your brand to new prospects.
Collaborate Through Referrals
Word-of-mouth is one of the most important marketing tools any small business can employ. A survey by Alignable found that 64% of small-business owners rank referrals and recommendations as the most effective way to acquire new customers, way ahead of other tactics such as social media (18%), their website (10%), email (four percent) and coupons/online deal sites (two percent).
Although most referrals depend on successful customer experiences, they can also come from the connections you form within the small-business community. Building a collection of solid contacts through local networking groups, meetups or your chamber of commerce is a great way to do this.
Start by creating a checklist of other businesses that you want to work with. Develop your elevator pitch and glowing client testimonials. Be bold and ask your network if they’d be willing to refer clients to you. If you want to get savvy and go further, set up a referral program with other businesses that includes a special offer for any referred customers and a small commission for the referring business.
Make Sure to Structure Your Collaboration
As you embark on your small business collaboration initiatives, put some structure to your efforts.
As with any partnership, you’ll want to ensure that things are fair and square. For example, if you’re collaborating on an event, make sure you agree on how you’ll divide time and tasks between the two companies. Assign a point of contact to manage the arrangement and, if any expenses are involved, determine how you’ll split the costs.
Be sure to set goals so you can measure the success of your collaborative efforts, whether it’s a certain number of contacts or referrals a month, new customers or revenue gains. Finally, constantly assess your collaborative efforts — if something isn’t working, find out why and try a new approach.