The business life cycle has four stages: startup, growth, maturity and decline. The following are some actions you can take at each of these stages when evaluating strategic partnerships to help your business prosper:
At the startup or introductory phase, your small business is in its infancy. You may have a unique selling idea or proposition you would like to present to your prospective market. However, startup businesses typically have less credibility or influence in the market, less capital and fewer resources — factors that are vital to startup survival. According to Gallup, 50 percent of businesses fail within the first five years. Fortunately, partnerships can help your business join the other 50 percent.
Small business owners may find it challenging to negotiate a strategic partnership with a larger company, but these organizations likely have better resources to help support your business. To overcome this issue, showcase your business's unique strengths to gain the attention of larger businesses looking to fill their own gaps. For example, your business may have positive word of mouth with a certain demographic that a larger, complementary business lacks. This opens your business up to a potential partnership with a company that could help your business ideas come to fruition.
As demand increases for your product or service at an increasing rate, your business enters the growth phase. Mergers, acquisitions and joint ventures are all options for growth here. However, before you evaluate strategic partnerships in this stage, consider your business's environment, including its strengths, weaknesses, opportunities and threats. This will give you an idea of how to pursue greater market share. For example, to attract new customers, you may want to form a strategic partnership with another company that lets you fill the gaps of your current business offerings. This will help your product or service appeal to a wider customer base. A strategic partnership can allow your company to gain more strength and build the necessary momentum to propel growth.
Once a company reaches maturity, performance peaks and ways of doing business become predictable and clearly defined. However, it's important for business owners to continue to examine their external environment to identify whether any part of the business should change. Forming strategic partnerships that help drive change to your business may be your best bet to address customers' current and future needs.
When a company enters the decline stage of the business life cycle, sales volume and profits fall. At this point, the business needs to decide whether to close its doors or implement a strategy to extend its life cycle. Rebranding, repositioning, introducing new technology or marketing new uses for a product are several ways to attempt to stay in business. Forming strategic partnerships to accomplish these or other actions could help keep your business afloat.
Evaluating strategic partnerships at each stage of the business life cycle helps small business owners create the big picture and form a strategic road map toward their business goals and longevity.
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