Small business: Partnering could be key to survival

Going it alone in this economy can be difficult for any small business.

With limited capital and limited expansion resources, many small businesses have no choice but to seek out strategic partners.

Finding the right relationship takes time but in the end can be just what your business needs to kick-start its growth, partnership experts say.

"In this new economy being able to put together alliances and partnerships is essential to survival," says Robert Wallace, author of "Strategic Partnerships: An Entrepreneur's Guide to Joint Ventures and Alliances" (Dearborn, $19.95)

In essence, it enables two or more companies to come together to achieve a business objective that neither could achieve on their own, explains Wallace, president of Bithgroup Technologies, an information technology services company, and Bithenergy, an energy production/management company in Baltimore that actively engages in strategic partnerships.

Filling the gapThe key is identifying your core needs (expansion or entry into new markets, for example) and finding potential partners that could satisfy those needs and/or complement your business model, says Wallace.

Conversely, you need to be able to adequately articulate to potential partners your own unique value proposition so that they can understand the core benefits and strengths you bring to the table.

"It works best when you can say to a prospective partner, 'I've got something you don't have and really need," says Stephen Glover, co-author of "Partnerships, Joint Ventures & Strategic Alliances" (Law Journal Press, $495) and a partner in the Washington law office of Gibson, Dunn & Crutcher.

So do your homework and find out as much as you can about the business you're looking to partner with, he suggests.

"Every organization you market to will be a little different," notes Glover. "Understand the person you are marketing to and what their needs are."

That's what Richie Schwartz, owner of Pets Photography Studio in West Hempstead, did before he approached Pet Supplies Plus to be its exclusive pet photographer in its regional stores.

"I read everything I could about the company," says Schwartz, noting that he not only wanted to be informed when pitching the company, but also wanted to make sure it was a company he wanted to be aligned with.

After doing his research, he felt confident enough to put in a call to the regional manager, who then arranged a meeting with Stanley Lang, president of Pet Supplies Plus for the Long Island region.

"You have to be persistent," says Schwartz, who came to the meeting prepared with samples of his work, customer testimonials and a plan of action on getting started in case the chain agreed to the deal, which it ultimately did.

Schwartz is now providing photography services at 31 Pet Supplies Plus stores, including 10 on Long Island.

"It expands my customer base," says Schwartz, who, thanks to the strategic partnership, is now in stores in New York, New Jersey, Connecticut and Pennsylvania.

Trust factor

Unfortunately, partnerships do not always work out well, says Ellen Volpe, president of Fern Resources in Huntington Station, which arranges joint ventures. Some businesses rush into strategic partnerships without knowing enough about their potential partner.

"There has to be a trust factor," says Volpe, who also serves as president of ABA of Long Island, a business development organization.

You have to make sure your partner will actually keep commitments, she notes, adding that both parties should have some form of a written agreement outlining the relationship, responsibilities and exit strategy.

Just don't get too hung up on the formalities, say experts.

"If you start to focus too much on the legal overlay, that could damage the relationship a little bit," adds Glover.