In the case of a strategic business partnership, bigger isn’t always better. In fact, opting to support small-medium-businesses (SMBs) could lead to the success of both your company and your new partnership. The reasoning behind this has been succinctly described by Business Tech Africa as when an entity grows beyond a particular size, it runs the risk of becoming slower in adapting to change.
However, as with any partnership, it’s important that communication and expectations are clearly set at all times. In this article, we will look at ways for businesses to take on these new partnerships in an effective and positive manner to help pave the way to success.
Why is an SMB Business Partnership Strategic?
Increasingly, we are seeing more enterprises invest in the value of SMBs. A large part of this is due to the fact that it contributes to many companies’ empowerment procurement initiatives which add to the social aspect of their ESG goals. Other than that, larger businesses can expect to profit from the following advantages SMBs can bring.
- SMBs have higher levels of investment
As SMBs have a smaller customer base than you’d see in larger corporations, each client these enterprises gain holds greater significance in determining the company’s prosperity. Consequently, in order for SMBs to survive, they are invested in their workmanship to constantly meet the needs and standards of their clients. This means that as the partnering company, you can receive a quality production level of goods and services with fewer faults than what you may see in larger corporations.
- SMBs can bring better-skilled staff
By virtue of being, small, agile and fast-growing, SMBs tend to attract employees that sit in the top quartile when it comes to output in the workplace. Moreover, SMB’s often grant employees equity or stock options in the business which generally leads to employees maximizing their levels of performance.
- SMBs make fast decisions
Unlike in bigger corporations that are fraught with hierarchy, SMBs offer fewer channels to go through in order to take action or make decisions. An important consideration to make when partnering with an SMB is the fact that you will have an answer to your query or a solution to your problem fairly promptly.
What to Look for When Finding a Business Partnership:
According to Business.com and the Small Business Administration, America has more than 30 million small businesses. Locally, Canada currently has upwards of 1.1 million SMBs that represent 54.2% of the economic output that is produced by the business sector. That’s a lot of options to choose from when looking for a strategic partnership!
The benefits that come from partnering with SMBs is highlighted when you know exactly what to look for. To help mitigate the risk of partnering with the wrong business, we highly recommend keeping in mind the following points.
Do Your Credit and History Checks
A new business is often found to be focused on meeting the short-term needs of the company, where making a sustainable profit drives the primary goals. This is where loans and partnerships commonly come into play. Before taking on a new partnership, it’s strongly advised that a solid credit profile is constructed before going forward. A credit profile will reflect the financial health of your potential partner and it may reflect whether or not the SMB has a healthy management and organizational culture.
Consider Their Supply Chain
Successful SMB partnerships go beyond CEOs and the set of employees, it involves a solid understanding of that company’s supply chain too. Understanding the way in which the SMB’s supply chain operates will help identify any potential problems that could arise and to ensure that ethical practices are maintained across all levels. If your partner’s supply chain doesn’t reflect the values of your own, you could run the risk of damaging your company’s reputation through legal action and fines.
Rely on Recommendations
Pursuing a new partnership isn’t something that should be taken lightly. After all, you wouldn’t hire a new employee without checking their references, would you? Relying on recommendations will help identify the depth, relevance, and training experience that the SMB can bring to your company to promote its success.
The Bottom Line
As you start to consider the potential of an SMB partnership, it’s important that your project’s unique set of needs and data sets are taken into consideration. Finding the right business partnership lies in making use of the data available to help make the right decision and to mitigate the risk of potential crises ahead of time.