There can be serious confusion in the world of small business. In short, we’re often thinking the wrong way about profit: which can come from more than just customers.
It’s all very innocent because many people decide to start a business because they are good at something. If you enjoy baking, you may open a bakery. If you’ve worked as an accountant, you might decide to go out on your own to do tax returns. And on occasion, someone will be good at business and then seek a business to own—of any kind that will be profitable.
But usually it doesn’t work that way. As a business coach, I see that the majority of small business owners are technicians learning to run a business.
Working with another person in a similar situation could be one of the best arrangements you establish for your business. As they meet and make friends with other business owners, they start trying to figure out how to work together to benefit both of their businesses. Some people call these joint ventures or partnerships. The Guerrilla Marketing guy (Jay Conrad Levinson) calls them Fusion Arrangements. And when businesses use those structures to mutually promote their businesses, he calls it Fusion Marketing.
Sometimes this can be fairly obvious. If you are a florist, you might want to connect with a wedding planner. After all, their customers are going to need flowers, and people may come into your shop to buy congratulatory arrangements when someone gets engaged. The same goes for a baker and a caterer, or an architect and a custom home builder.
Other arrangements might not be so apparent. For example: the family law attorney would benefit from knowing a great realtor, and vice versa. Why? Because when people split up, they often need to sell a house. And sometimes when people go looking for a house, it’s because of changes in their family situation.
There are tons of potential benefits to these kinds of agreements, such as:
- Promotion to an audience that is your target market
- Shared costs if advertising
- No cost if promotions are handled ‘in kind’ – I’ll put up a sign for you in my business if you will put up a sign for me in yours
- Customer referrals
‘Arrangements’ like these have been in practice for a long, long time. They work very well if both owners share a handful of core elements:
- Similar Target Markets and Ideal Customers
- Values (quality of work and business ethics)
- Like Goals (both are actively seeking new customers, for instance)
When these elements are not aligned, problems usually arise and customers can get caught in the middle. When that happens, one or both of the businesses suffer as well.
What does that mean? Not all businesses are good candidates for a match! In fact, your very best friend may be in a business that will not relate or connect for a profitable fusion arrangement. Or, her business may be at a different level and she has to adjust for scalability and just isn’t ready to grow more right now. You know, that’s okay. Find another way to work together, perhaps in a civic organization.
Be on the lookout for businesses that complement yours and that also serve the clients you want to serve. It helps you get to that market faster than starting from scratch. Just be sure that the core elements are shared by both and you know you can rely on the performance of the other person and their business.
Another important aspect of developing a fusion arrangement is to have total clarity in actions and responsibilities. Simply, who will do what? Lay that out, and be clear about the plan and timelines, too.
Initially it might seem like more work, but as the arrangement starts rolling, it can produce great results. Do it right and it will certainly pay off.