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Forming Collaborations With Your Competitors to Pursue Mutual Goals

  • Collaboration can be done across business sectors or with direct competitors
  • Benefits include cost sharing, combined problem solving efforts, and gaining business insights
  • Businesses should have clear objectives when setting up collaborations with direct competitors

Summary by Dirk Langeveld

Competition is a natural part of doing business. Even if you come up with a completely unique business model with an untapped market, you can expect other companies to compete for your customer base before long. You’ll always need to differentiate your products and services and make the case for why customers should buy from you instead of someone else.

However, sometimes collaboration can be highly beneficial. You might partner with businesses in other sectors for such efforts, but can also team up with direct competitors to pursue common goals.

For small businesses, collaborative efforts can work to promote and support the community as a whole. For example, Inc.com profiled how businesses in Keene, N.H., made a concerted effort to support each other during the COVID-19 campaign through crowdfunding campaigns, restaurant promotions, and other efforts. Businesses can also come together for community initiatives such as clean-up events or local celebrations like restaurant weeks.

Collaboration with another business offers several advantages. One key benefit is that you’ll gain insight on how you do business, including ways you can save money and new tools or processes that can assist your company. You’ll develop professional connections, and might also find an expanded customer base.

Teaming up with another company allows you to focus on the end goal of solving a problem or completing a project while sharing the expenses involved in this work. You can also join together on advertising and marketing efforts, including co-branding and business referrals.

Collaborating within your industry can improve your outreach to a customer base that’s already seeking your products or services. However, it might make the most sense to pair with a company offering complementary services rather than a direct competitor. For example, a car repair business may form a collaboration with a local car wash. You can also form collaborations with retailers that sell your products.

When collaborating with a direct competitor, you’ll need to be strategic. After all, you’ll still be competing for the same customer base and you’ll want the collaboration to be mutually beneficial. Have clear objectives, be prepared for the occasional conflict, and know what limits you’ll need to set in areas such as technology sharing.

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