Partnering with other firms is an option worth exploring for small businesses looking to take on large contracts, especially when they are concerned about their ability to service deals many times larger than anything they might have taken on before.
Collaboration has many benefits. For example, working closely with another enterprise or enterprises may expose you to practices or strategies that you could apply within your own business.
Working together in a sub-contract or joint venture arrangement could also give you the scale necessary to compete with much larger organisations and access markets that would have previously been out of reach.
Small is beautiful
Most entrepreneurs want to retain control of their business but also crave growth. Collaboration is a more straightforward alternative to merging two or more different enterprises and if the arrangement doesn’t work out, it is a lot easier for everyone to go their separate ways.
There are many ways of finding potential collaborators. The first place to look is among existing customers and suppliers as they know your business and how you operate, but it is also worth tapping into specialist or national trade bodies.
A collaboration may be a more informal arrangement than a merger, but that doesn’t mean you should skimp on the due diligence. Your business will be judged on the behaviour of your partners, so you need to make sure they have a similar attitude to customer service and delivery.
Meeting of minds?
It is also important to find a partner that you can get along with. Working on a large contract will place everyone under pressure so it is vital to be able to discuss any issues that arise professionally and amicably.
All parties need to understand that by presenting a united front to win a contract, the client will expect the relationship to run smoothly. It might be worth testing the water with a small scale joint project before pitching for a very large piece of business.
Collaboration agreements are private arrangements and there are templates available online that can be used to create them. However, it is worth seeking professional advice – especially if you have not entered such an agreement in the past – to ensure that your interests are protected.
Take your time
Once you have found a suitable partner or partners and everyone is clear on what is expected, the formal contract will set out the terms and conditions of the collaboration, what the parties want to achieve from it, what they will contribute in terms of human and financial resources, the process by which disputes will be resolved, and the mechanism for leaving the partnership.
Perhaps most importantly, you must satisfy yourself that any potential partner is financially sound and expect them to make the same checks on your business. The up-to-date financial data available to users of cloud-based accounting packages such as Big Red Cloud will make it easier to demonstrate your financial health.