Leveraging Strategic Relationships - Pt. 1

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Often because small businesses have a shortage of capital and capacity, they struggle to compete against their larger competitors. Yet despite their uses in almost every sector of business, strategic alliances, including mergers and acquisitions, have not been pursued aggressively enough as viable options for growth. As large corporations continue the trend of reducing their suppliers and looking for companies that can handle larger, more diversified tasks, smaller companies must consider a broader range of alternatives to grow more quickly. New ideas and solutions related to growth and expansion must be developed and embraced by these companies if they want to be competitive.

Much of the responsibility to make this concept a reality rests with the small business owners. In order to position themselves for larger deals, smaller skilled companies that lack capacity must leverage their strengths with one another to create bigger, faster, stronger enterprises that are more capable of handling complex, multi-million dollar sourcing deals. This will require more forward thinking entrepreneurs who are willing to engage in these strategic relationships with the potential of having to relinquish some control. The big picture must take on a greater meaning. Everybody might not be able to be the head honcho. However, if two companies can come together to create a stronger single enterprise, allowing them to win larger, more lucrative contracts, then that is more important than each individual company remaining separate and fighting over scraps.

Corporations also have a significant role to play in this type of growth strategy. For them to have a meaningful impact within their small business and diverse supply bases requires bold, courageous action and strategic resources, including human capital and management assistance. There needs to exist an incubator-type atmosphere that will provide these companies the support and guidance needed to make these kinds of business relationships successful. Nobody benefits if these arrangements fail. This kind of action also requires proactive, forward thinking corporate visionaries who are willing to make long-term commitments that may not pay immediate dividends, but will eventually result in substantial benefits to both the company and their suppliers.

With the right amount of focused attention, however, mergers and acquisitions can become viable options for many corporations who are looking to grow their diverse supply base as well as develop new sourcing solutions that add overall value. This not only demonstrates good corporate citizenship on the part of the corporations, it helps to establish new sources of ideas, innovation, and inspiration.

Return here soon for Part 2.

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