While larger companies frequently merge or add bolt-on acquisitions, it is much more common for small to mid-sized companies to add resources to better address market conditions.

Frequently, the most cost effective way of adding capabilities is with strategic partners and alliances. A strategic alliance is like an associate; they add a certain skill or service to round out your offering, but don’t technically work for your company.

Step 1: Develop/Partner Decision
Where cost of developing capabilities is low, or partnering is unadvisable due to conflicts or lack of synergy, a plan for determining how to add resources is critical.

Step 1a: Selecting Strategic Partners
Tips to achieving best fit:
• Partner with a contractor who provides a companion service your clients need.
• Partner with experts at a service you’ve dabbled in.
• Never partner with a company that provides the same or overlapping services.
• Partner with a company the same size as yours or smaller.

Step 2: Structure the Relationship
• Don’t over-structure the alliance. Keep it fluid because it will change as you get to know your alliance better. The structure will naturally tighten up over time.
• Agree to regular ‘state of the union’ meetings. Prioritize them. This lets you to deal with issues at once and apply structure as needed.
• Align sales goals and strategy. Quarterly sales reviews to make sure you’re on the same page about pricing, strategies and continuing to work together.
• Don’t offer exclusivity. State your intent to work with your alliance as much as possible, but make sure they understand that occasionally you’ll have to go outside the relationship.

Step 3: Measure Progress & Results/Review/Adapt


You can tell I’m clearly coming down on the side of partnering ahead of developing internal abilities. It’s really just walking before you run. The time will come when adding a department makes more sense, but wherever a high degree of expertise is required, different support structure or business development vectors, then partnering brings the benefits without all the risks. For both parties.

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