By Jeffrey E. McElyea, Lucid Business Strategies

Small businesses are the fuel that drives today’s economy. The Small Business Administration Reports that 99% of all businesses are small businesses (under 500 employees), and that they generate 52% of the Gross Domestic Product. That is the good news. The bad news for small business owners is that 49% of our country’s economic output is generated by the remaining 1% of the businesses – “Big Business.” How is it possible to compete against such enormous odds? Many small businesses are answering this question by forming Strategic Alliances.

A Strategic Alliance is an agreement between two companies to combine resources to provide complimentary services (among other things). In many cases these Alliances are formed so that both companies increase the number of products or services they offer, without adding costs to their organization. Each business remains autonomous, and pursues its own revenue, but comes together when a project requires the resources of the other company. This enables each business to compete for much larger jobs than they can separately, resulting in increased revenues for both companies. Some companies report increasing their revenues by as much as 25 – 30% because of forming such alliances!

It is important to evaluate Strategic Alliances very carefhuully before entering into any agreements. Be certain that each company offers a product or service that can extend the capabilities of the other organization without being a competitor. Make sure that each of you shares similar beliefs relating to product quality and customer service, and only team up with an organization that is already successful, and has sufficient resources to handle increased business as you both grow. Most importantly, be sure you absolutely trust both the organization and the people running it. With so much depending on the success of a Strategic Alliance, how do you find a business that will make a good teammate? Perhaps the best advice is to work at it! Define the type of organization that will be a good fit for you, and find them. One of the best methods is through formal networking organizations, or Chamber of Commerce functions. Using networking opportunities for the express purpose of building alliances can help you find good “fits”, and provide a forum for generating business for each other. You can also use these opportunities to add a third (or fourth) organization to your Strategic Alliance that enhances the capabilities of all three businesses.

You are now on your way to becoming a “Big Business in a Small Business World!”

Jeff McElyea, MA is the principal and lead consultant of Lucid Business Strategies, a management consulting firm that applies the principals of HPT to help small business owners build successful enterprises. Prior to Lucid Business Strategies, he spent 20 years in middle and senior management positions in the hospitality industry, where he had full operational and financial responsibility for the success of the businesses. McElyea received his master’s degree with high distinction from the performance improvement and instructional design program at the University of Michigan, Dearborn. As part of his graduate work, McElyea received his Human Performance Improvement (HPI) certificate from ASTD. He is a past board member of the Greater Detroit Chapter of ASTD, and is a mentor for the Michigan ASTD Train-the-Trainer program. McElyea has published articles in ASTD Links, and is a frequent contributor to business publications in S.E. Michigan. He has been an invited speaker at more than 30 national, state, and local conferences. He may be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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