Strategic Partnerships: What They Are and How To Create One

By Indeed Editorial Team

Published March 8, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

When it comes to running a business, the relationships you make with other companies can help you find even greater success. Specifically, strategic partnerships are a mutually beneficial business relationship that can help your business grow at reduced costs. Understanding these partnerships can help you find the right one for expanding your reach to potential customers and clients. In this article, we define strategic partnerships, describe multiple types of these partnerships and offer steps you can take in building these relationships for your own business.

Related: Finding and Choosing the Right Business Partner

What are strategic partnerships?

A strategic partnership is a business partnership that involves the sharing of resources between two or more individuals or companies to help all involved succeed. Strategic partners are usually non-competing businesses and often share both the risks and rewards of the decisions of both companies.

The goal of a strategic partnership is to create value for each company by offering information, services and other resources that the other company otherwise either has no access to or could only access through a financial exchange.

Benefits of strategic partnerships

Strategic partnerships offer each company involved the chance to reduce expenses and increase business. A good strategic partner usually is a company that either offers services you can use within your own company or that you can offer to your customers and clients while offering your own services to their customers. These partnerships can expand your customer base, brand awareness, overall reach and service functionality.

These are mutually beneficial partnerships that can help both startups and established businesses.

6 types of strategic partnerships

There are several types of strategic partnerships, each offering their own benefits. Before entering into a strategic partnership, consider which of the following business relationships would be most beneficial to your company:

1. Marketing partnerships

Marketing is essential to business success and growth. A strategic marketing partnership is one where you and a company in a related field help each other find new customers or clients. For instance, if you own an independent transportation service, you may know someone who owns a small bed-and-breakfast. In a marketing partnership, you could each refer your clients to the other business, as there is a likelihood that many customers would need both services.

Larger businesses, such as manufacturers, may find partners in companies that sell the manufactured products, agreeing to manufacture and sell products exclusively for each other.

2. Supply partnerships

Supply partnerships are the most common types of strategic partnerships. These are the vendors and manufacturers who supply your business with the products, services and materials your company needs. Sometimes, these are exclusive partnerships, such as giving an exclusive contract to a paper supplier for your office needs. If you own a store, you sell shelf space for vendors to sell their products, though this is often non-exclusive.

3. Supply chain partnerships

Not to be confused with supply partnerships, supply chain partnerships involve multiple companies working together to create one finished product. For instance, if your company builds automobiles, but it is more inexpensive for you to purchase some parts from another manufacturer, you may want to enter into a strategic partnership. Think of this as one large manufacturing company, where each individual business creates its own part, ships it to the next company, where it gets added onto a product. The process goes on from there until the last company finishes the product.

Many supply chain partnerships are exclusive, as the finished products are often proprietary.

Related: What Is Supply Chain?

4. Integration partnerships

Strategic integration is all about making separate things work together. You can see this most easily in the digital landscape, where customers use social media apps to log on to various online stores and websites. Many companies also partner with payment app services to allow for easy purchasing from both their websites and physical storefronts.

The goal of an integration partnership is to make a customer's daily interactions with businesses more simple, convenient and tailored specifically to themselves. Ultimately, integration aims to make using your product so easy and useful, it becomes a part of your customers' daily lives.

5. Technology partnerships

As the world grows more reliant on technology, it can be important to make sure your business has the resources it needs to take care of that technology. Whether it's partnering with a company that can fix your computers at a price that meets your budget or a cloud service that offers discounts for the amount of space you need, finding a technology partner can help your business run smoothly and keep on pace.

6. Financial partnerships

If the company you run isn't in the financial market, it might be helpful to partner with an outside firm to handle your finances. The benefit of hiring a financial firm to handle things like accounting is their ability and expertise and handling these matters exclusively. This is especially true if it would use valuable resources to handle these matters within your own company.

Financial partnerships can cover everything from accounting, to stock programs, to benefits plans. These can still be mutually beneficial. For instance, some companies offer their employees benefits for holding accounts at banks with whom they've begun a strategic partnership.

How to establish a strategic partnership

There are many ways to begin a strategic partnership, but when you decide entering one is the right decision for you, consider the following common steps you can take:

1. Be clear about what you need

Whether your business needs help with distribution, marketing, finances or anything else, have a specific goal in mind. The only way to know you've succeeded is to know what you hope to achieve. Once you know what you're looking for, you can search for the partner to suit those goals.

2. Do your research

Whether you search online, contact people in your network or call businesses to ask a few simple questions, try to gather information on what companies could most help your business meet its goals and, just as importantly, which companies are likely to enter into a relationship with you.

Try to make sure the partnership is mutually beneficial by finding a business that needs something you provide. This way, they are more likely to offer you what your company needs in return.

3. Create a contract or agreement

Once you've found a company that would make a great partner and they've agreed to a deal, consider having an official agreement made by a legal professional. A typical strategic partnership agreement includes the following:

  • A list of all companies involved

  • The specific services each provides

  • The specific terms agreed upon

  • The duration

  • The signatures of the responsible parties

When working together to create the agreement, you may find that both parties have their own stipulations that need figuring out before signing. This is why hiring a lawyer or other legal official is helpful. They can also help create the specific language of the contract to keep all parties happy before signing.

Related: How To Build Good Working Relationships

4. Honor the agreement and nurture the relationship

These two ideas work together to maintain the partnership as it continues. Once you've entered the partnership, it's important to keep the needs of your partner in mind while you work. When possible, keep in contact with your partner, continue to give them referrals or honor the agreement by offering your services. Since the goal is to benefit both companies, consider making sure your partner shares in the success and remains happy with the terms of the agreement.

Though this is a business relationship, it's helpful to maintain a positive personal relationship, as well. If you can continue keeping your strategic partner happy and doing your part, they may be more likely to honor their side of the agreement, or even offer expanded services or discounts not in the contract.

Explore more articles