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Starting Up: Teaming Up With Other Businesses

By DIANA RANSOM, SMSMALLBIZ.COM
Posted: 2008-08-25 18:22:44
Filed Under: Small Business
smSmallBiz.com

WANT TO DRUM UP extra business for less? Here's a marketing strategy that'll turn even the most independent entrepreneurs into team players.

August is usually the best month for Nancy Schneider, founder of Nancy & Co., a chain of women's clothing boutiques in the New York City area. But this year, she says, sales are pretty much, well, flat. So Schneider is hosting a "Jean Therapy" promotion at her East Hampton store, throwing trunk shows and special jeans fitting events. She's publicized the month-long shopping extravaganza in newspaper ads and other marketing vehicles. But her real secret marketing weapon? Fellow small businesses in East Hampton, who have agreed to join in the promotion.

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    For instance, Exhale, a local spa and gym, is distributing postcards about the "Jean Therapy" event to its customers. (In exchange, Nancy & Co. is passing out coupons for a free Exhale exercise class to its patrons.) And local shoe purveyor Shoe INN is offering a 10% discount to Nancy & Co. customers that spend $300 or more. "It really works well for us," says Schneider, who doesn't typically sell shoes. "We promote them in our advertisements, and we have their coupons in our stores."

    Indeed, says Nancy F. Koehn, an entrepreneurship professor at Harvard Business School, "working strategically with other businesses makes good sense." You'll be able to promote your company's products or services to a wider, targeted audience for less than you might pay if you were going it alone. Such a proposition may be particularly rewarding for cash-strapped start-up entrepreneurs, she says.

    Here's how to work with other businesses and get more bang for your marketing bucks:

    Complementary Types Attract

    When you're considering potential partners, seeing eye-to-eye is key, says Liz Goodgold, a small-business branding consultant in San Diego and author of "Redfire Branding," an upcoming book about marketing. "Make sure you're targeting the exact same consumer," she says. You also should both match up on price. For example, she says, companies pitching premium products should align themselves with other premium-product vendors. Lastly and perhaps most importantly, make sure your products or services complement your partner's.

    That's what Napoleon Barragan, the founder and chief executive of 1800mattress.com, an online retailer of mattresses, had in mind when he recently started partnering with brick-and-mortar furniture and carpet stores. His thought: When people are buying carpets or furniture -- to furnish, say, a new apartment -- they might also need a new mattress. Plus, people like to "try out" mattresses, something they can't obviously do through an online shop. Under the arrangement, the local stores get a commission each time they sell one of Barragan's mattresses. "We help each other because we are in a similar situation," he says. "It's mutually beneficial."

    Working Together

    Small businesses that offer related -- yet different -- services can easily refer customers to one another, says John Jantsch, a Kansas City, Mo.-based marketing coach and author of "Duct Tape Marketing." Photographers, caterers and disc jockeys, for example, might team up and create a referral network. Accountants, bankers, insurance salespeople, attorneys and other consultants might band together to offer full day or half day of workshops. "Each [partner] invites [his or her] own customer base and gets exposure to the collective attendees," he says.

    Jeffrey Carr, a marketing professor at New York University's Stern School of Business adds that the key to a good promotion among smaller players is to spread the word. Be sure to inform people either via advertising in local newspapers or sending out direct mailers. “Show them that there is some reason to come into your store," he says.

    It's also a good idea to offer a discounted rate or coupon, says Goodgold in San Diego "The minute you add an incentive you make it an active referral and that increases the likelihood that a customer will try it," she says.

    Getting Big Business

    Some businesses are lucky enough to land partnerships with big businesses. Such a matchup can be particularly rewarding for small businesses whose products or services are available nationally, says Carr. "They get access to way more customers than they could ever get on their own."

    That's the thought Kelly Flatley, co-founder of the Norwalk, Conn., granola-maker Bear Naked, had about working with Whole Foods Market in its "Reverse Trick-or-Treat" marketing promotion, which took place this past Halloween. The point of the promotion, notes Flatley, was to get people to trade in their unhealthy Halloween candy for a sample of their products. At a promotional fair in New York, people who dropped off candy got a coupon for a free bag of granola, which they could redeem at a nearby Whole Foods. That promotion, says Flately, "allowed us to create trial and build awareness."

    ("Starting Up," a weekly column written by Diana Ransom for smSmallBiz.com, follows entrepreneurs through the early stages of launching a business. Write to her at dransom@smartmoney.com.)

    2008-08-25 15:45:09
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    9 comments

    storefrontfilms 02:37:02 PM Nov 26 2008

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    i own a small video production/marketing company in nyc's SoHo district - Storefront Films (storefrontfilms.com) and have been working very closly with the graphics and printing company Prince Street Copy also in SoiHo and it has been a huge boost in business for us both...here's to strategic alliances! looking forward... michael della femina

    storefrontfilms 02:32:14 PM Nov 26 2008

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    I own a small boutique production company in nyc's SoHo - Storefront Films storefrontfilms.com and have been working very closly with a printing and graphics company Prince Street Copy also in SoHo and the alliance has proven very successful for us both! lookig forward...

    williamsroke 03:44:02 AM Nov 13 2008

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    Leader in providing content to mobile phone users WORLDWIDE. ROKE is set to take off. See for yourself at www.icoft.com/roke.html

    freegasatlast 01:10:38 PM Sep 03 2008

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    I got Involved with a startup emergency information services where your critical data is stored online for immediate access in event of an emergency this service has teamed up with gas stations in the Dallas and Houston area and with pharmacies in New Youk area to market this life saving service. I think it is an excellent idea and I am very exicited about the growth this will bring.www.freegasatlast.com/2gasup

    tolbertlock 03:10:53 PM Aug 28 2008

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    It didn't tell me where I could get a business grant to cover start up cost and to help pay for help ...whre can a person get a grant? How do you get a business grant? Are the grants the goverment talked about a lie? Bettytolbertlock@aol.com

    m74t 06:58:29 AM Aug 27 2008

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    Excellent idea - and one that I could apply at urbeautysource.com - thanks so much for sharing.

    m74t 06:57:31 AM Aug 27 2008

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    Excellent idea !!! This could definitely work for my business at www.urbeautysource.com. Thanks for giving me plenty to think about today!!!

    rytaway 12:43:52 AM Aug 27 2008

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    Well taken I'm involved with sales for a website development firm (Zow.com) andthe shift I've noticed in small business owners from day to day has been dramatic to say the least. People are just accepting that they have a minimum standard (ie. there own limited reasources) and there is nothing else left. I will work harder to help my community see the benefits of synergizing together. Starting with my own clients. Thanks for the encouraging article.

    danielonlybus 05:02:37 PM Aug 26 2008

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    Excellent points made in this article. Many small business owners eye fellow entrepreneurs as "the competition" - missing out on valuable market-expanding opportunities. Interestingly enough, on our site (OnlyBusiness.com, an SMB-focused eCommerce platform and community) - we've found a good amount of activity in our investment and opportunity forums - very transactional dialogue. This is a good first step, but we want to see more of the critically-valuable partnership you discuss in your article. We have already provided some business tools to allow businesses to unify their market positions and offerings in order to build a true sense of their 'business groups and community', and we are also taking steps to encourage the education and networking your article addresses in our community areas. We believe that this will help companies realize the 'benefit through synergy' that a unified and complementary market approach can provide, beyond the budget and market reach of any one sma

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