other combinations of business entities can also be employed to raise new funds for your
business. The business climate of the '90s has encouraged the use of joint ventures and
alliances between businesses as a means of reducing costs and ownership dilution. Most of
these arrangements are contractual, but no standard contract terms exist for all industries.
The advantages of these joint ventures and alliances is that your business can finance
certain services or production functions by sharing expertise, assets, expenses, and risk
without necessarily incurring cash debt or trading equity.
For small businesses, strategic alliances often consist of simple "bartering" with customers,
suppliers, and even competitors. For example, if you own a manufacturing business, you
might be able to get a better price for component parts if you propose using a label on your
final product that includes the supplier's trademark. Alliances for research and development
efforts are also quite common as a means of minimizing these long-term costs. In certain
high-tech industries, the cooperation of other businesses is essential, not only from the
standpoint of financing, but also for marketing, licensing, and distribution.
When considering strategic partners, most small businesses will benefit from partners that
add value, not just money. For instance, a business association with a well-recognized
industry name can generate immediate credibility and also assist in advertising and
marketing for your company. Your networking ability plays a major role in locating and
investigating strategic partnering opportunities.
