The latest statistics from the ONS show that the UK economy expanded by 0.5% in the July-to-September period, the first real insight into the financial impact of the EU referendum since June’s vote.
These figures – though not as positive as the previous quarter – are still better than many analysts anticipated, however the true impact of Brexit on the economy remains to be seen. With this continued uncertainty, small businesses across the UK are looking for new ways to boost sales while keeping their marketing costs low.
Strategic partnerships could be part of the solution.
Large organisations’ size and breadth of services bring with them a raft of cross-selling opportunities, and while smaller businesses lack the scale to do this on their own, there’s nothing stopping them from developing or joining networks with other like-minded entrepreneurs.
That said, anyone who’s ever had a relationship turn sour will know that some partnerships are more successful than others.
Of course, there’s an obvious need for a balance in terms of results and efforts, but there’s also value in both a good cultural fit and alignment of audiences. When it works, it works, with both businesses benefiting from things such as new customers, reduced costs, operational efficiency and increased brand visibility.
If you’re reviewing your current arrangements or considering setting up a new partnership, take a moment to find out more about the different types of partnership available and the secrets to making them work:
Peas in a pod: Complementary partnerships
Businesses that appeal to similar audiences and have products or services that, while different, complement one another are especially well positioned to collaborate.
The advantages of this approach could include being able to pitch as one combined entity. Pooling resource in this way can be great in the early stages of building up a customer base, but make sure you are contractually and legally protected in case something goes wrong. Also, be aware of your own brand value and keep an eye on how much time you invest into winning work in another agency’s name.
Of course, some small business network groups provide automatic referral schemes but these can sometimes be more problematic than partnerships that are formed directly between two business leaders due to a genuine bond of shared values and trust.
Complementary partnerships can also be used to create efficiencies and cost savings. For example, e-commerce businesses can share warehouse space or purchase goods as a co-operative for economies of scale.
|Case Study: Brighton-based photography firm, The Brighton Studio partnered with The Progress Film Company to share premises earlier this year.|
“We'd outgrown our old premises so when a bigger space became available we knew we had to take it, but we also recognised that the overheads on such a massive space were prohibitive for our two-person business.
“In partnering with long term collaborators The Progress Film Company, we made the move affordable, splitting outgoings and overheads.
“Over the last five years or so, we’ve realised we have a lot of overlap in our culture and ethos of our businesses. We are both young, professional lens-based businesses, proud to contribute to Brighton's creative industry.
“In addition to splitting rent and rates, we're now joining forces in promoting and running events. We have regular catch up meetings to keep in the loop with each other's upcoming schedule and figure out if there are any ways we can help each other or cross-sell our services.
“This co-operative partnering has encouraged us to start regular events for filmmakers and photographers in the studio, which has brought some incredible new connections to both of our businesses.”
– Xoë Kingsley, head make-up artist and co-founder of The Brighton Studio
Of course, when it comes to sharing premises, issues of contracts, insurance, allocation of space and cost splitting need to be clearly addressed from the outset to protect all parties.
Chalk and cheese: Competing partnerships
Though it may seem to flout the rules of common sense, partnering with competitors can actually provide good returns. An example of this in practice could be a group of businesses pooling their marketing budgets on an event or adverts to achieve more than each could on their own, such as a group of food and drink producers, restaurants and retailers joining forces to throw a farmers market or food festival event.
On the same note, businesses that are competing for the same customers can work together to refer clients to one another where they are unable to take them on due to lack of capacity, geographical restrictions or conflict of interest. Of course, this approach relies very heavily on trust, so choosing the perfect partner is critical.
Partnerships are a fantastic way for small businesses to achieve economies of scale or boost their marketing on a budget – but as with any solid relationship, the benefits must be mutual.
Working with a trusted advisor such as an accountant, businesses can assess the sources of new business to identify what income has come directly from the relationship. By comparing this data against the money and time they have invested into the partnership, business leaders can calculate the financial value of the partnership so far.
By Bivek Sharma, head of small business accounting, KPMG