Let’s face it. No business is an island. In one way or another, you will need complementary services or products from another organisation / company.

Owing to this fact, what strategic entrepreneurs do is to move out of their comfort zones and form those strategic alliances or partnerships that eventually transform their businesses and reduce operational costs.

We all know how COVID-19 has changed our lives and businesses. Many skills and distribution channels that we thought were important to companies have been discarded. However, do you know that strategic alliances could solve or alleviate much of the business challenges facing SMEs from market access, delivery, or resource constraints?

This article explores why you should consider entering into partnerships or alliances. Let this be part of your planning schedule in 2021.

We agree with Marc Herlant, a contributor with Earnst and Young’s assertion that businesses can only survive in the new normal by identifying new opportunities through building strategic collaborations and partnerships.

And this is why we think you should devote some time and identify key institutions and businesses that you can strike alliances and partnerships with this year to help alleviate part of the challenges caused by the global pandemic.

The following are some of the key reasons why:

Capacity building for free

Often, when companies co-operate on a project, there is an automatic exchange of skills, and ideas at no cost. For a small business with financial and capacity limitations, entering into a partnership with other relevant institutions that can complement your efforts should be top of your priority.

Typically, in choosing alliances, partners should possess expertise in areas of mutual benefit. Areas of mutual interest could be capital, distribution systems, networks, or credibility in the marketplace. This is something important for your small business. But in all alliances/ partnerships, as Professor James E. Henderson advises, parties must pay close attention to knowledge/skills diversity, process multiple knowledge flows and tasks, and create adaptive leadership for its longevity and success.

Only enter into alliances and partnerships that are beneficial to you as a business at all times.

Enhances competitiveness 

Your business will, no doubt, need expertise from different fields. What the majority of traditional companies used to do is to develop in-house expertise. However, COVID-19- related rapid technological changes and customer preferences have exposed how difficult it can be to maintain all the expertise you need as an organisation.

Recommended article: Expectations and possible realities to prepare for in 2021

Most competitive businesses are adopting a strategy of maintaining their core competencies only. A partner organisation then fills in the gaps in the skill bases. As a result of this strategy, you can save the money and time needed to build your internal capacity.

Accordingly, the Entrepreneurs blog of 2019 suggests that outsourcing your work can help your business reduce cost by 59 per cent, assign specific work to specialists, save time, and expand your offering.

Facilitates entrance into new markets 

Recommended article: Effective Business Planning for 2021 – Consider this 3-Item Checklist

If you dream of entering markets outside of your current location, think of making strategic alliances or partnerships.

Consider the example of Pfizer and the strategic alliance it made with the Israeli government on Covid-19 vaccines. According to The Financial Times, Israel promised Pfizer “to build one of the fastest vaccinations drives globally and share data on its impact on the pandemic, so long as supplies were plentiful and uninterrupted. Pfizer agreed, and the deliveries started by mid-December.”

Today, Israel leads in the vaccination against COVID-19 while Pfizer is being given the required data about how its vaccines work.

Final Thought

Even in your small business, partnerships will allow you to use their networks, advise you on local issues such as taxation, business standards, and labour or market viability.

So, especially at a time of a pandemic-related decrease in revenues, why not reduce your operational costs through partnerships and alliances? And also reap the other benefits of sharpening your competitive edge?

Think about it and make partnerships and alliance part of your core strategy from now on, especially during these challenging times.

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