As a small business owner looking to expand your operation, collaboration with a competitor can be an effective way of achieving growth. Here, Crunch Accounting CEO Darren Fell explains how rivals can become allies.
To collaborate effectively with a competitor, you need to put your past differences aside and work together, combining your resources and knowledge to the advantage of your clients. Partnering with a competitor is a challenging procedure – but the rewards can be extremely beneficial for your company, and your customers.
For sole traders and micro business owners looking to successfully collaborate, there are a few simple steps you can take to ensure you make a success of it – although it isn’t always the right fit for everyone. Below are some of the key areas to consider when thinking about collaboration.
Do your research
Collaborating with another company – particularly a competitor – is a big decision that shouldn’t be approached without all of the right information. At the start of the process, sit down and really get to grips with the business model of your new potential business partner. Does everything add up and is the partnership really going to be worth it?
Is your competitor a good match for your customer-base, and do your workplace cultures and ethics fit together nicely? If the answer to these questions is no, perhaps a collaboration isn’t the right path for you. Whatever the outcome, it’s not a decision that should be made lightly, so be sure to invest in researching and really understanding the partnership.
Start off on the right foot
Finding the perfect partner all starts with clear and transparent communication. You need to establish a firm idea of what you’re both hoping to get out of it and, crucially, find out why the other company is interested in working with you. If both parties approach a deal with different objectives, chances are it won’t last long. At worst, it could end up causing irreparable damage to the reputations of both.
So before making any big decisions, sit down with each other and have an open and honest discussion about your goals. If you share a common vision, your chances of success are much higher.
Be in it for the right reasons
Leaping into an agreement with another company simply because it looks like you could make a quick buck is a recipe for disaster. Focus on improving your product or your services, and how you can make life better for your customers and employees. With the right aims, success will come naturally – as long as you do the groundwork and keep your wits about you, you’ll soon discover just how powerful collaboration can be.
Pool your resources
If you’ve got limited resources, joining forces with another party makes perfect sense. Are you a freelance writer? How about collaborating with a graphic designer and web developer to provide a one-stop website building service. Or perhaps team up with other writers to tackle a large project. The opportunities are endless, and you’ll be able to provide prospective clients with a much more tempting offering.
If you do choose to collaborate with a competitor it’s essential that you get past old rivalries and develop a professional relationship built on mutual trust. Of course, you shouldn’t forget that they’re still ultimately the competition and will always be looking at ways to grab market share from you in other areas. But as you work with your business rival on a shared project, put competition aside and share your knowledge and ideas. This way you’ll soon start to build up trust, a key ingredient of a good partnership.
Good things come to an end
Always keep a look out for signs of change. A shift in your partner’s management, performance, or overall strategy can signal the end to your business relationship. If you’re aware of the warning signs, you’ll know when it’s time to call it a day amicably.
Collaboration opens up a huge range of opportunities, and it’s by no means something solely for larger corporations. Micro businesses and sole traders can take their businesses to new places by working with others. If you do the groundwork and find that your competitor is a good fit as a business partner, then go for it and make the most out of it. Partnerships don’t need to last forever, but while they last they are a great opportunity to learn invaluable lessons, access new resources, and ultimately grow your business.
Darren Fell is the CEO of Crunch Accounting – which recently partnered with FreeAgent to launch Sole Trader, an accountancy package for the UK’s sole trader market.
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