Small Business: Teaming up with other businesses

Jamie Herzlich

Newsday columnist Jamie Herzlich Jamie Herzlich

Herzlich writes the Small Business column in Newsday.

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Going it alone in business can be difficult, particularly in today's challenging economic environment.

But often, small businesses can find synergies with other businesses, allowing them to go after larger contracts and secure new business.

While not all alliances work, finding the right business or partner to team up with can open new opportunities and expand your client base, say experts.

"The right alliance can develop a new standard of service and expand your ability to build your business," says Ellen Cooperperson, CEO of Corporate Performance Consultants, a Hauppauge firm specializing in organizational and leadership development.

She speaks from experience. She recently entered into a strategic alliance with Jacquelyn Gernaey, CEO of The Alternative Board of Suffolk County, an organization of business owners who meet in think-tank groups.

For the two, it means expanding their customer base and reach, and providing more services to existing clients. They'll each keep their own individual corporate entities but offer their services to each other's clients and host joint events. "We're very excited," says Gernaey, adding, "alliances could help you reach your goals much faster."

Reluctance to team up. Still many businesses shy from alliances for competitive reasons.

"It's not readily being adopted," explains Bill Wahlig, executive director of the Long Island Forum for Technology in Bethpage, which spurs collaboration among small businesses. "But I think with LIFT's efforts we're beginning to help companies think through the process to make the right decisions to team together."

LIFT has won a second grant from the U.S. Small Business Administration for a pilot program to help companies work together to more effectively compete for federal contracts, says LIFT president Frank Otto.

The initial grant helped create a Long Island Rail Suppliers Alliance website and database, where companies can access contract opportunities and find potential partners, says Wahlig. LIFT will expand on these efforts with the second grant.

Many companies couldn't secure these federal contracts from a cost and risk perspective if they didn't team up, because they're so small, explains Otto.

A member company of LIFT, the Applied Science Foundation for Homeland Security, has been trying to foster collaborations among small businesses at the Morrelly Homeland Security Center in Bethpage to compete for federal and state contracts. The foundation owns and operates the center.

Success stories. One of its success stories is VCORE Solutions, a joint venture created in 2010 as a result of a partnership between Balfour Technologies and Power Management Concepts, both located at the center.

"We saw a synergy between our two technologies," says Bob Balfour, chief technology officer at VCORE, a software developer for the homeland security and emergency responder market. One immediate benefit of the joint venture is "the size of contracts we're going after has increased," says Balfour.

VCORE is also a member of Project SAFEguard, a program created by the Applied Science Foundation to develop emergency planning documentation for school districts and municipalities, says Otto. VCORE and four other companies work cooperatively to compete for contracts to provide these services. "We've done about five districts," says Otto.

Contracts. While these types of programs have been successful, any business entering into an alliance or collaboration shouldn't jump into it lightly.

Cooperperson and Gernaey entered into a contractual relationship outlining the responsibilities of each party as well as the financial arrangements, explains Gernaey.

And they had met for four months before even considering an alliance. It gives you a chance to size up the character of the other person. "Without integrity no contract is going to work," says Cooperperson.

 

Fast Fact:

In a survey last year of over 300 respondents, more than half expected the volume of strategic partnerships to increase, with the percentage rising to 60 percent at smaller companies.

Source: Deloitte's Corporate Development 2012 study