Strategic alliances happen when two or more businesses work together to create a win-win situation.

For example, you and another business may decide to share office space and facilities so they can share mutual resources and cut the costs associated with maintaining an office space.

You can form a strategic alliance with any business and for any reason, however, keep in mind that the arrangement must be mutually beneficial for this arrange to be worth considering. If the strategic alliance is one-sided and the benefits are not equally balanced, then strategic alliances typically breakdown because resentments and conflict develop because one or more parties may feel taken advantage of.

To give you an idea of the scope and breadth of strategic alliances, here are some examples:

• A clothing retailer forms a strategic alliance with a single manufacturer to ensure consistent sizing and quality.
• An adhesives manufacturer forms a strategic alliance with a research laboratory to develop a next-generation adhesive that runs clean on production lines.
• A commercial design company forms a strategic alliance with a digital marketing agency to improve its marketing efforts.
• A commercial maintenance company partners with a commercial real estate agent to write a regular column in the real estate agent’s newsletter, adding value to readership and expanding the maintenance company’s marketing reach.
• A coffee shop partners with a bookstore so people can browse the latest bestsellers and take a coffee break all in one go, thus expanding the customer base for both partners. This alliance happened between the coffee company Starbucks and the bookstore Barnes & Noble.

When you first launch your coaching business you may have to consider a slightly unequal strategic alliance to get your foot in the door and begin your business. Because you are trying to build your client base and establish your business, you will sometimes need to partner with a more established business that may have the upper hand, so you can get started.

A contractual strategic alliance is created when two or more businesses sign a contract to pool their resources and seek mutual benefits together. The two businesses remain autonomous while exploring new opportunities together.

Benefits of Entering into Strategic Alliances

Cooperating with an excellent strategic partner can be a powerful way for small businesses to grow. Strategic alliances can get you more leads, more customers, and more profits; they can also help you to cut costs. Here are some of the ways a strategic alliance can add value to your business:

• Improve the quality and efficiency of your operations
• Economies of scale from combining resources
• Knowledge-sharing creates the ability to learn from the strategic partner
• Expanding the customer pool
• Ease the learning curve for new pursuits
• Shared risks and costs
• Multiply the quality and effectiveness of your referrals
• Gain low-cost access to complementary resources
• Innovating by applying new approaches, methods, and technology
• New businesses can achieve a low-cost entry into the market
• Gain access to restricted markets that cannot otherwise be reached alone

Entering into strategic alliances can change the competitive environment. It is possible and legal for two businesses to form an alliance to establish economies of scale, reduce prices to customers, and push out competitors, thus gaining market share.

One commonly used model for coaching is to create a shared space of wellness professionals where individual professionals can share space together and also rent space to other wellness processionals. The benefit of this approach is a reduction in office space costs, the creation of a more professional work environment, sharing resources like a receptionist, printers, Internet access, and kitchen area.

Who Makes a Good Strategic Partner?

The keyword here is “strategic” — you need to find likeminded professions who works as hard as you do to achieve common goals. The goal is for all partners to benefit, and benefit equally, for the duration of the alliance. If the alliance is not working for both partners, then it is not truly strategic.

How do you know if a partner will be truly strategic to your business? Generally, it will meet one or more of the following criteria:

• It is vital to the success of a business goal, such as reaching new customers, developing strong industry relationships, developing new products and services, or cost reduction.
• It can help you develop or scale a core competency. Does the partner fill your gaps or niche?
• It blocks a competitive threat, for example airline alliances that share routes do so to stop lower-cost competitors gaining a foothold.
• It reduces serious risk to your business, such as the threat posed by competitive businesses because your alliance is able to deliver better value and a broader range of competitive offerings.

Initially, you may not have much in common with a potential strategic partner—few people would have imagined how successful a partnership between a coffee store and a bookstore could be. But if there’s scope for you to give something, as well as getting back, then the relationship could be worth exploring.

Risks of Strategic Alliances

No business arrangement is entirely risk-free, and there are specific challenges to consider when establishing a strategic alliance:

• Partners may exaggerate or misrepresent the benefits they bring to the table.
• Ask yourself, are you giving more than you are getting?
• One partner may commit more than the other, leading to frustration and conflict.
• Is the alliance only strategic to one partner in the alliance?
• Differences in how the two partners operate can cause conflict, even if the goals of the alliance are clear.
• With long-term alliances, the parties involved will become mutually dependent.
• What impact does this have on your autonomy?
• What if you become more dependent on the partner than the partner is on you?
• The alliance stops adding value to your business and becomes no more than a conventional business relationship. Can you get out?
• Partners may fail to use their complementary resources effectively. This can harm both parties; at the very least, it will hinder the performance of the alliance’s goals.

Even a short-term alliance will require you to open your business and proprietary information to another party. Do this lightly at your peril. The bottom line is, there must be a great deal of trust between the two partners.