What's the fastest way to grow your business with maximum leverage? Well, that would be a strategic alliance. Want to know more? Want to know how to do it? You've got to join us for the Daily Dose of Dave on the InsideBS channel. Hey now, it's Dave Lorenzo.

I'm the godfather of growth. And this is your Daily Dose of Dave on the InsideBS channel. Today, we're talking about strategic alliances.

And strategic alliances are partnerships between businesses that help you expand your reach. They'll help you increase your revenue. And you can even use them to gain a competitive advantage.

Now, as a business owner, forming strategic alliances give you access to resources. They give you access to technology and access to expertise that you might not be able to afford to acquire in your business on your own. Today, we're going to explore the different types of strategic alliances and how you can find the right partners and the steps to building and maintaining successful collaborations.

Why are strategic alliances important for you as a business owner and an entrepreneur? Well, they expand your customer base. Partnering with another business that complements your business and allows you access to new customers is a great way to increase your market share, to expand your base of customers, and to attract new people to your business and build your brand without increasing your marketing budget. You also can share costs and risk when you enter into a strategic alliance.

There's a joint effort in production, distribution, and research and development. And this reduces the expenses for your business. Strategic alliances also enhance your credibility.

So aligning with a trusted brand boosts your reputation and builds trust faster with new customers. You can enter a new market effectively and efficiently because you're piggybacking on someone else's brand. Strategic alliances also accelerate your growth.

They help you buy scale because your operations may not be able to ramp up quickly enough. But when you combine your operations with somebody else, you can enter new markets quickly. So there are several different types of strategic alliances for your business.

We're going to look at a couple of them here today. And we're going to explain how they work and why they may be effective for you. The first is referral partnerships.

So this is where businesses exchange leads or referrals for mutual benefit. Now, this is a more formalized agreement than, say, joining a networking group and passing leads to one another once a week. This is a strategic relationship where one of your people is embedded in the business of another person.

And when they sell their product or service, the customer is immediately handed off to you so that you can sell them your product or service. I'll give you an example. One of the companies that I've worked with for years is Heartland Payment Systems.

And Heartland Payment Systems sets up strategic alliances along these lines with community banks. So a rep from Heartland will have a relationship with a banker where when the Heartland rep signs up a client for payroll processing or for credit card processing, they immediately make an introduction to the business banker. And they say, if you're not doing business with Mr. Smith, I highly recommend that you do.

He's the only banker I refer in this area. And here are the three reasons why. Similarly, when the banker gets a new deposit account from a business owner, he immediately makes an introduction to the person from Heartland Payment Systems and says, if you're not using Heartland for your credit card processing, you need to use them.

If you're not using Heartland for your payroll processing, you need to use them. So the referral partnership goes both ways. And that's a structured strategic alliance.

The second type of strategic alliance for entrepreneurs is product bundling. So two companies package their products or services together for greater value. So if you've purchased a computer, a Dell computer comes with Microsoft products already installed.

That's a strategic alliance. A third type of strategic alliance is a supplier or a vendor agreement. And this is a partnership that secures priority pricing or improved service or exclusive terms for people who are customers of one product for another product.

So in other words, if you are a customer of American Airlines, you get special perks if you stay at Hyatt Hotels. And Hyatt Hotels customers get special perks with the American Airlines Advantage program. This is a strategic alliance where there's an agreement to share customers by these two specific vendors.

There may also be agreements, for example, with people who purchase copiers and a specific type of toner. You may get a special price on a toner for your copier if you buy it through XYZ company if you're using a Canon copier. The fourth type of strategic alliance agreement are marketing collaborations.

So this is co-branding or joint advertising or social media partnerships that expand your reach. So for example, my company, Exit Success Lab, has a marketing collaboration with Sendrowski Corporate Advisors. We run a high net worth group that's called the Sendrowski High Net Worth Group because we work together with Harry Sendrowski and his team at Sendrowski Corporate Advisors.

And the clients who join that group are clients of both of ours. So that group is co-branded and that's a strategic alliance between us. And the benefits are multiple.

They get the credibility of working with us and we have the credibility of working with them. We also get to share the customers that we both put into the group and it works out very, very well and it has for many years. So how do you find the right partner for your strategic alliance relationship? Well, I'm going to give you four things to specifically look for in the right partner.

First is shared values and goals. You need to look for businesses that align with your mission and your long-term objective. The second thing is complementary strengths.

A great strategic alliance fills the gap in your business's expertise or in your business's product lines or in the market reach that you have. If you have strengths where the other business is weak and the other business has strengths where you're weak, it's an ideal strategic alliance partnership. The third point is having a proven track record.

You want to choose partners who have credibility and strong leadership as well as a reputation for reliability. This is key. And then the final point is there must be a clear benefit for both parties.

A partnership must create value for everyone involved. So there has to be win-win scenarios that are driving the long-term success. What are the steps to forming an effective strategic alliance? Well, there are five.

First, you want to define your goals. You need to be clear about what you want to achieve and that's probably revenue growth, brand awareness or technological access or any number of different specific goals. You must be really clear and specific about your goals and you need to make sure they're measurable.

Step number two is to identify potential partners. So research businesses that align with your mission and strengths and that have the same core values as you and your business. Step number three, reach out to those potential strategic alliance partners and pitch them on the value that you provide.

So go to them with a clear proposal on how their business will benefit first and foremost and also explain the reason why you're reaching out to them in the first place. Don't neglect your reason why because they're going to want to know what your motivation is but always structure your pitch so that there's a clear value that you're offering to the strategic alliance partner. Step number four, negotiate all the details of the agreement.

So outline the deliverables, outline the expectations, make sure that the commitments are clear and they're spelled out in plain English language and memorialize it in a formal agreement. Don't over lawyer the agreement. Make it plain language, easy to understand, documentation.

Do it quick, make it brief, make sure it has minimum legal jargon, as little legal jargon as possible. Step number five is the execution and the management of the strategic alliance agreement. You're going to implement a structure for collaboration.

You're going to track performance and you'll adjust as needed. The principles, the people who negotiated the agreement, they need to remain a part of the process throughout because you don't want someone who didn't have a hand in writing the agreement to be involved in managing the agreement afterwards because that's when the finger pointing and the blame game really begins. Now let's talk about how you measure the success of a strategic alliance partnership.

There are four things you should look for to make sure that this is working for you and there are four things that you should look for to make sure it's working for your partner. Number one is revenue growth. You want to make sure that the revenue is increasing and profitability is increasing along with it as a result of this strategic alliance partnership.

Your strategic alliance should be an effective and efficient way for you to grow your business. If it's not, then you have problems. So make sure that revenue growth is not only effective but efficient.

Sales and profitability should be absolutely the priority measurement tool to make sure your strategic alliance is working. The second is new customer acquisition. You need to be reaching new audiences through the strategic alliance.

If you're not reaching out to new audiences, if you're just cannibalizing your own customer base, that's not a good thing. So make sure your new customer acquisition is increasing as a result of the strategic alliance. Brand recognition and reputation should also increase.

So your business should have improved credibility. You should have name recognition among a new target audience. If this isn't happening, it's not a reason to scrap the strategic alliance if it's profitable in an effective and efficient way.

But you do need to make sure that your brand is reaching the target audience and you're not just making these sales on the back of the other brand. Then finally, it has to be operationally efficient. So costs need to be reduced and productivity needs to be improved as a byproduct of your strategic alliance partnership.

When should you exit your strategic alliance? Well, obviously, if those things aren't happening. So there are four things to think about when your strategic alliance is going bad. And these are, number one, if the results aren't meeting expectations, you need to get out.

Number two, if your business priorities shift. So you may enter a strategic alliance today and five years from now, your business is going in a different direction. If the alliance can't shift and adjust with the evolving market conditions, you need to get out of it and you need to part company with the other company as friends.

The third thing is if trust or commitment declines. Maybe leadership changes. Maybe the people who are managing the alliance change.

If that commitment wanes, then the mutual respect isn't there anymore. The accountability isn't there anymore. That's a time to end the strategic alliance.

And then finally, if a better opportunity arises, let's say someone else is ascendant in the marketplace and they offer you an opportunity. I love loyalty, but in business, the first loyalty you have is to the shareholders of your business. So if a better opportunity arises and there's more money to be made elsewhere, that's an opportunity you should probably take advantage of.

And if there is one, you need to make sure you investigate it. And if it's necessary, end your current alliance so that you can enter into a future alliance with another strategic alliance partner. So that's a quick overview of strategic alliances and how you can use them to employ leverage in your business.

If this is something that's interesting to you, if you're involved in strategic alliances and you want to make them more effective or efficient, if you'd like to start some new strategic alliances, this is something that Nicola Gellarmino and I and the team at Exit Success Lab are very, very good at. Clients engage us all the time to seek out and negotiate new strategic alliance agreements for them and their business. If you have an interest in having us do that for you, you can give me a call at 305-692-5531.

That's 305-692-5531. My name is Dave Lorenzo, and this is The Daily Dose of Dave on the Inside BS channel. We will see you back here again at 6 a.m. tomorrow.