5 Types of Strategic Business Partnerships

Introduction to Strategic Business Partners

Expansion is always at the forefront of a business's list of priorities, as it offers new leads and new market opportunities. Unfortunately, most organizations do not understand how to begin growth ventures or may even fear the unknown. With a strategic business partner, companies can gain advice from industry experts and provide their own services in return.

What are Strategic Business Partnerships?

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Strategic business partnerships are long-term symbiotic relationships between businesses that focus on providing value to either partner. The more value the relationship provides for either business, the more strategic the partnership is. However, the point is not to extract value from either one particular company but rather to share it.

Partners can add value to one another through resources, money, labor, and even helping each other meet their objectives. For example, small businesses can partner with third-party organizations with expertise in advertising to help them meet financial goals. Large enterprises may enter relationships to provide guidance in their specific market to increase the customer reach of their partner.

A true business partnership strives for growth, collaboration, innovation, and optimized processes for both parties. In order to achieve this, partners should strive for transparency, trust, open communication, and shared goals. This will take strategic planning, hard work, and dedication to the partnership by both organizations.

Types of Business Partnerships

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While organizations can partner with any company to achieve specific goals, there are five common types of business partnerships.

Research and Development

Companies seeking to improve their inventory often create a research and development (R&D) partnership with businesses that develop products. This allows the company to enhance its competitive edge by innovating its goods while sharing the development and resource cost. R&D partnerships also decrease the impact of potential risks by sharing them between the two businesses.

These types of business partnerships can be found throughout various industries, but especially in the pharmaceutical field. Pharmaceutical organizations use R&D partnerships to find the most effective medications and treatments for various health concerns. Not to mention, health care facilities are always in need of the latest technology to improve diagnostics.

Experts and Content Developers

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The exponential growth of technology over the past couple of decades is significantly impacting customer buying behavior. This leads many businesses to seek advice from consumer demand experts that also advise shoppers on big purchase decisions. By partnering with organizations with content expertise, companies can optimize their product placement and content marketing strategies.

Co-created content gives partners more authority within their market and target audience for quicker results. It can also detect issues that typically fall between isolated businesses so the partnerships can provide prompt solutions. When the partners establish a foothold in their market, they can generate consistent leads without much effort of their own.

Market Engagement and Co-Promoters

Marketing is a common partnership, as companies often seek third-party agencies to handle campaigns. This type of marketing partnership is more traditional, as it only improves customer reach within the industry. However, some modern companies engage in co-marketing partnerships that appeal to both the target audience and other markets.

Solution Integrators and Co-Sellers

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Many product and service providers work together to collaborate on an inclusive solution for their different clients. For example, many inventory management software providers will integrate ordering software from various industries to provide a holistic solution.

The various ordering software can include retail, food, or pharmaceutical vendors, depending on the customer. By entering a solution integrator or co-seller partnership, both organizations can increase their revenue and clientele.

Peer Group Communities

Peer group communities provide a non-threatening atmosphere for businesses to gather and collaborate. In these relationships, companies do not have to worry about competing with one another. Instead, organizations can openly share their struggles, insights, and prospects to generate valuable feedback. Through this open line of communication, all parties can brainstorm solutions to each other's challenges.

Benefits of Business Partnerships

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The whole point of entering a partnership is to provide and receive valuable advice or services that improve business. When done correctly, organizations unlock several benefits.

Overcome Fears

Many companies fear change and venturing out into unknown markets and consumers, making it challenging to expand. However, business partnerships offer opportunities for growth at relatively low risk.

The adjacent partner provides an automatic foothold into a new segment, along with additional resources and advice. This allows organizations to overcome any reservations that they may have regarding expansion.

Increase Expertise

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Organizations can always improve their content and marketing strategies by engaging with industry giants with expertise in customer demand. With expert partners, businesses can reduce their market life cycle and enhance product turnover. When combined with the other company's ability to execute the plan, both parties can provide the other value.

Decrease Acquisition Costs

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Typically, when businesses enter a partnership, they gain access to their resources, such as labor, contacts, and even funds. By leveraging their partner's supplies, companies can significantly reduce the cost of acquisition and overhead. These expenses often include employee hiring, training, and onboarding, as well as the respective clerical work.

Establish Predictable Income Sources

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Successful partnerships add revenue streams to both parties, whether through the provided services or increased sales. Partners often work out a payment agreement, where one facilitates the actual sales and shares the final profits. Some even charge an automatic flat rate for each lead the business generates for their partner.

Offer Consistent Sales Growth

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When partners establish a stable relationship and operate at full capacity, they can boost sales and customer reach. Eventually, these leads may convert into loyal customers and create consistent revenue streams. This extends the businesses' original limits, introducing new potential consumers and target markets.