Making Your Small Business Alliances Profitable

The most important question you will ask when looking at collaborative business relationships, Is the synergy worth the energy?

The reason I ask this question is because, developing successful and profitable alliances is rarely easy. If it were, everyone would be doing it successfully. Many alliance consultants, and myself included, have determined that about 50% of the alliances created in the United States fail for one reason or another.

The reasons that you may select to enter into alliance relationships are varied, and generally based on need and competencies. The need side is usually represented in areas where we may consider ourselves or our organization to be lacking or weak. The competency side is the opposite, the strengths that we have to share. An ideal alliance situation is with a person or organization that exhibits competency in our weaker areas and weakness or need in our personal and/or organization’s areas of competency. This is where our circles of interest strongly overlap—where we have the greatest chance to be of service to one another.

Building Competent Collaborations

To be successful in building competent collaborations, at least a sprinkling of the following six personal qualities should be encompassed within you and your alliance partners: Curious, Vision, Communication, Leadership, Organize, and Compassion. Let’s look at these individually.

Curious. While you’ve undoubtedly heard is said many times, “Curiosity killed the cat.” We’re not cats. We’re business people searching for leading-edge methods for which we desire to improve our capabilities and hopefully our profits. Curious means you are open to new, and frequently, unsuspected opportunities. You must be curious to alliance possibility in order to simply get started.

Vision. Where is it, which you want your alliance to help you reach? What synergistic goals do you visualize being possible? Simply developing an alliance because it appears the trendy thing to do is hardly a reason to put forth the effort. Additionally in the area of vision, you must be able to see into the future and not become dependent upon your alliance partner—doing this will make you weak. On the other side, if you become too independent, you will no longer be desirable ac an alliance partner to others. Your vision needs to be to work toward that proverbial, and many times elusive, sweet spot where you become interdependent and develop time effective synergies.

Communication. Through my research, I have discovered that the leading reason for alliance failure is communication. While communication does cover a number of issues and situations, this is the key area for which I’d suggest you focus greatly.

A great example of the need for quality communication is the fact that Eli Lilly, the pharmaceutical giant, writes into many of their alliance agreements a mandatory quarterly face-to-face meeting of the principals from each company in the alliance. While the Lilly executives sometimes complain they do not have the time for these meetings, the meetings are contractually mandatory. Generally there is a social dinner the evening before the meeting where many of the current issues and problems get brought out in the open in a non-threatening manner.

Following the 911 attacks and resulting travel challenges, some of the Lilly alliance executives tried fulfilling these contractual obligations via videoconferencing. It seemed to work well and continued substituting videoconferencing for the mandatory face-to-face meetings. It did not take long for alliance problems to start magnifying. As soon as they went back to the live face-to-face meetings, they started again solving challenges before they ever became alliance relationship problems.

Leadership. In order for your alliances to be successful, you must exhibit at least a modicum of leadership qualities. I did not say dictatorship! Here, more than in any other area, your willingness to focus on getting things done, rather than to obsess on being right will determine alliance success. In a corporate environment, the paradigm of partnering must start at the top. The executive must drive the philosophy through both word and deed. Even if you are a single person practice, you must be an alliance champion throughout all the areas of your business.

Organize. Your ability to organize, in the form of alliance structure, procedure and process will have a huge impact on the ultimate implementation and longevity of your alliance relationships. Continuing with Lilly, their alliance implementation process is so sophisticated that they measure (Lilly Web) the perceptions of all of the key players in their alliances—Lilly players and those of their alliance partners. The perceptions that they measure are basically what everybody thinks about one another. This allows Lilly to course correct when they discover that Lilly’s, and their alliance partners’ perceptions of the performance of one another is distorted or out of balance.

Compassion. As you meander through the process of alliance development and implementation, you need to have compassion, and even tolerance, for the foibles of others. This quality will allow you to maintain your sanity in what can sometimes seem like alliance insanity. As you develop alliance relationships, sometimes your alliance partner might, in your opinion, let you down. Since not everybody happens to be as bright as you are; an alliance success secret is to give your alliance partner a break once in a while—especially if your expectations are a bit unrealistic.

Relationship Value Update. For years, I have told my alliance clients, that if they would just complete a Relationship Value Update (RVU) for one another as little as twice yearly, they could head off a number of relationship killer situations. Some have, and succeed but unfortunately many have not and have failed. While using this tool does not guarantee success, but it sure makes alliance success more likely.

There is the long form in my book, Developing Strategic Alliances, (to access this and other helpful additional information from Ed Rigsbee at no charge, please visit www.rigsbee.com/downloadaccess.htm). Here, I’ll share with you my short form. I believe this RVU if used diligently, will make a lasting difference for you as you go through your alliance implementation process.

Below, you will find the three key questions for both you and your alliance partner to answer IN WRITING about the value of your alliance with one another. Then mail your answers to the other. Then each of you can review the information in the privacy of your own office—it’s much better this way. Doing this is far less threatening than is a face-to-face value meeting—that can be done later. Now each of you can quietly read the RVU and hopefully better understand the others’ perspective on the success of the alliance and the value it does, or does not, deliver. This tactic is your best help for avoiding perception challenge issues and dealing with small issues before they get out of hand.

• The value I’m getting from the relationship.

• The Value I think you are receiving.

• Your suggested improvement strategies

Contracts. Written agreements, whatever you call them, are crucial in the success of an alliance. No matter how trusting and loyal each alliance partner operates toward the other—in time people forget their promises. Sometimes they even come to believe they promised something other than they actually did. You have heard it said by any number of professional speakers, “The palest ink is far better than the most retentive memory.” I have found this platitude to be quite accurate. By putting to paper your expectations of one another, along with promises and listing who is responsible for what, you both will have a living document to use as an alliance relationship guide. This guide, contract or agreement, whatever the name, can naturally be adjusted at any time based on new information, market conditions and/or changed alliance partner commitment levels.

In the final analysis, I can honestly tell you that alliance relationships, for a myriad of reasons, can be extremely profitable for all involved. The key is to determine if the synergy is worth the energy. If it were not, why in the world would you want to proceed? But, if you believe the synergy is worth your energy, you can open the door to a new world of business possibilities. With partners that share their complementary core competencies, things can be done that you may never have imagined possible in your career. A truth that I have discovered in my years of alliance consulting, most people are in such a big hurry to build their alliance that they over look the most important alliance issue—pick your partners well. Skip the necessary due diligence, and you’ll be crying about conflict resolution and exit agreements rather than focusing on the opportunities and possibilities.

My Alliance Partner Quiz will help you to get a fighting start in selecting your alliance partners. You may also access this at no charge, please visit www.rigsbee.com/downloadaccess.htm.

Good luck in building your synergistic alliances.

Community Partnering for Small Business Success

Walking to my car, I heard loud music. This was not exactly what I expected in Grants Pass, Oregon on a warm Saturday July evening. I had just returned from an exhilarating jet boat excursion to Hellgate Canyon and enjoyed a ranch style dinner on the Rogue River.

The music was getting louder and louder as I approached the parking lot. It was coming from across the street. It was an automobile dealership, Mock's Ford, and it was alive with action. There was a band playing, with folks of all ages dancing to the music, a barbecue filling the area with its popular aroma, and yes, people were buying cars. The excitement and activity drew me like a magnet to metal.

In front of the sales office, a local radio station, Cruisin'-FM, was conducting a live-remote broadcast allowing all in attendance to be involved. I located the dealership president, Don Carr, and during our chat he told me that they had sold almost as many cars so far that weekend as they usually sell in a month. To top it off he said, "We're not giving these cars away." Carr created a weekend partnering alliance with his community and won big.

How would you like to sell your products at that rate and still make a profit? You might be saying, "That's great for selling cars, but what about me?” The answer is to get involved with your community in a way that serves people and created high-level exposure for your business. You'll need to be creative and develop some fun, helpful, exciting community activities. Remember, being unique is not an absolute necessity, but it’s very helpful.

Creativity has always been, and will always be, the retailer's call to battle. Creativity is also one of the key ingredients necessary to create value in the eyes of your customers. The way the national big box category busters (i.e., Wal-Mart, Circuit City, and Office Depot) develop perceived value is through selection and low price, not necessarily service. If you are an independent retailer and you’re trying to do battle in their arena, they will clean your clock. But, creativity is not necessarily a word that big boxes, at the local level, understand.

For years, Baby boomers have been the pig in the python in our economy. They were heavy-duty consumers in the 1980s, buying their first houses and filling them up, buying luxury cars and all the outward trappings of success. In the 1990s they traveled and purchased RVs. Now, with most of the Boomers having grandchildren, they will buy almost anything if they perceive it’s a good value. Also, determine what they perceive as value-added in how you run your business and give it to them—they'll reward you with profits through their loyalty. Don’t forget about the X and Y Generations. While many were part of the dot com bust, they still seem to spend freely.

Create a unique position for your business in the minds of your customers and your competition in the marketplace is greatly diminished. Remember though, unique means one of a kind, (not just a bit different) and that's what you must be if you plan to survive and prosper throughout this decade and beyond.

Earl Nightingale, co-founder of Nightingale-Conant Corp., the worlds largest producer and distributor of audio and video learning systems continually offered this suggestion for creativity: take a yellow pad each morning and spend a quiet hour thinking about the major challenges for the day. He would go to work listing all ideas he could think of—no matter how crazy, impossible, wacky or boring the idea might appear. "Some ideas you'll use and many you'll toss out," he would say. The important thing is to capture the ideas and take action on the ones you believe will assist you in achieving your goals.

So, how does all this creativity and uniqueness talk help you to partner with your community? You can't just copy what others have done and make it work for you. You can, copy the process used but not the results. Your community is uniquely different, your neighbors have special needs, and you must use your creativity to find a winning combination.

Here's how to get started. Head for your chamber of commerce, if you're not a member yet, and join! Ask for their list of clubs and organizations. Do any interest you? I know you don't have time for that kind of stuff. Trust me, you do! It's all in how you choose to participate. There are more ways to participate than just showing-up to their meetings and events, be creative.

Volunteer to chair a fundraiser, one that you can have at your location—yearly! The event can be in your store, in your mall or center, on the sidewalk in front of your store or in your parking lot.

1. Flea market or rummage sales are about the easiest to put on and quite profitable, find an interesting twist though. You can arrange to have leftovers picked up by a local charity.
2. Community holiday theme party such as a Halloween costume party. Do this after hours, charge for attendance and give the profit to your organization. During the day offer a discount for those who shop in a costume.
3. If you are on a busy street try a Saturday barbecue, possibilities are endless.

You might be wondering why you need to have these activities in conjunction with a community organization—for PUBLICITY! In the example I mentioned at the beginning of this article, Carr paid for all the advertising. When you work in conjunction with a local group you get public service announcements (PSA) free of charge and you ALWAYS mention the location (yours) in the news releases.

If you want more help in doing news releases or publicity, head for the public library and go to the non-fiction # 659 section. While you are at the library, stop by the reference desk and ask to look at the Gale Directory of Print & Broadcast Media, you'll find the address and phone number of all the media in your area. They are whom you notify for your up-coming event.

Another idea might be to head a local organization that you care about from your place of business. Be sure it's a high profile organization; this can bring you closer to your community. It will give many potential customers another reason to visit you.

For you die-hard's who want exposure to the community but refuse to join a local organization, here are some ideas. Hold a parking lot aerobics class (in warm weather) three days a week at no charge; allow everybody to participate. The ones who enjoy the benefits will love you and who knows how many hundreds of people will take notice as they drive by.

Try working with the local city government and have a bus stop in front of your store or better yet, as one ski shop in Camarillo, California did, organize a city sponsored bus service to the beach in the summer (the pick-up was at the shop). Be creative and have a winter service too.

Work with your school district; offer incentives to students who achieve high grades, as does a surf shop in San Diego, California. Many schools and cities have work programs for youth; get signed up with these kinds of programs. Go to the source, ask local school principles how you might assist, let them know that you want some exposure in trade. Many of the franchise chains have jumped all over that idea. Also, don't forget about sponsoring youth sport teams.

Take notice as to what your community does already. Ask yourself, "How can I add to the activities currently in place?" Take time every morning to view and list your options in solving your challenges and things will appear simpler and solutions will become known. Be sure to understand the value your customers are looking for in that which you offer and find your uniqueness. Achieve these things and you will get a greater piece of your area's retail pie.

Six Additional Ideas To Partnering With Your Community:

1. Show the community that you care by words as well as deeds.
2. Write articles that will be of interest and assistance to your community in your business area of expertise. Then offer the articles to the print media.
3. Get on a local radio or TV show and talk about the state of the swimwear industry or how the different styles flatter different shapes.
4. Use the Public Access equipment that the federal government requires cable TV businesses to provide and produce a video for broadcast. The cable companies will teach you how to use their equipment. Remember the production needs to be "informational."
5. Contact your state highway department and join their "adopt the road" program. Your store cleans a mile-section quarterly and you get your name on a sign on the highway for all who drive by to see.
6. Hold pasta feeds for sports teams. Consider local high school or college teams, and remember to tell the media.

Three Activities for Small Business Alliance Success

While I realize you might think these ideas too simplistic, understand that a number of people spend their entire careers working on the fine details of alliance development and implementation

Finding others with whom you can create mutually beneficial value.
Too many business owners never get past this first activity. In searching for another business with which to develop a strategic alliance there must be complementary core competencies. This means that their circles of interest must overlap, as should their core capabilities. Inherent in the search for a compatible partner is the fear of having to give up a modicum of control. Giving up control is a huge hurdle for many small business owners.

Delivering that value to one another.
This would seem straightforward but the challenge is in understanding what your partner considers valuable. Too frequently, one partner delivers value to another that the second partner did not consider to be of value. Guess what? The perception from the second partner's point of view is that no value has been delivered in this situation.

Communicating to your partner the value you delivered.
Through my work in the area of alliance development and implementation, I have discovered that about fifty percent of the alliances created are not successful. The primary reason for the lack of success in most cases was ineffective communication. There are a number of possibilities from basic to complex. Many of the successful communication methods are electronic centric.

Ya gotta measure the results; many of the follow up and feedback methods use the 360-team evaluation style of response mechanism. This allows perceptions of alliance performance in both the macro and micro to be known by all. Once challenges are discovered, repair strategies and tactics can be put into place.