Competitor or Collaborator?
Read time: 4 minutes
It may surprise you to know that many of my biggest customers over the years, have been other distribution companies. In today’s newsletter, I am going to look into this topic and explain why the first instinct should never be to turn your ‘competitors’ away, or to deliberately price them out of the market.
Working together with other distributors can help us grow in ways we might not be able to on our own. This includes different types of industries and new places. It helps us learn more about various industry areas and regions. We might also find products that we wouldn't be able to get otherwise.
Most people fail because they don’t appreciate the opportunity that sits in front of them. The immediate fear of the competitor. That somehow supporting them means, you are taking away from your own business.
Today’s areas:
Benefits
Negatives
How To
Balance
If you want to be incrementally better: Be competitive.
If you want to be exponentialy better: Be cooperative.
Benefits
Market Penetration: Working together with rival companies can be a really good chance to enter new markets or business areas. This kind of partnership can help us deal with new places, learn what local customers like, get past usual problems like rules and regulations, and setting up ways to deliver our products.
Market Intelligence: Working together brings a lot of different knowledge, mixing ideas from various markets, products, and customer groups. Akin to a huge, shared database where each partner adds their own special information. Creating a fuller and more correct understanding of how the market works, and where the chances are.
Enhanced Reputation: Partnering with other established companies can significantly boost your brand’s credibility and respect in the industry. Almost like an endorsement from a well-known and trusted figure, not only elevating your brand's status, but also extending its reach to new segments and markets.
How to
Identify Mutual Goals: Getting to know what each company wants to achieve is very important. It's about discovering a shared area where both companies see the benefit of working together. This could be anything from splitting the costs of R&D, to both companies going into a new area together, especially if one of the partners is already has experience there.
Open Communication: Creating a strong base of trust and common values is really important. Having clear and open talks helps to line up what we want to achieve, set what we expect from each other, and deal with any problems that might come up.
Pilot Projects: Start with smaller, low-risk projects to help build trust and understanding. This way, both sides can try out working together, make any changes that are needed, and get to know how each other works.
Negatives
Loss of Control: When you share decisions and planning, it sometimes means you have less control over parts of your business. It's important to find the right balance between working with others and keeping some independence, so that your own business goals aren’t lost.
Dependency Risk: Depending too much on a partner you work with can be risky, especially if there are problems in the partnership. It's important to have backup plans and keep a certain amount of independence.
Introducing a partner to a new market, product, or area and then being cut out: There's a risk that your partner might take advantage of the collaboration to advance themselves and then cut your company out. They could use the knowledge and market chances they got from working with you for their own gain.
Balance
Equal Contribution and Benefit: For a partnership to work well, both companies need to put in and get out an equal amount. Keeping this balance makes sure the relationship lasts, is good for both sides, and stops any feelings of unfairness or taking advantage.
Maintain Identity and Independence: Even though it's good to work together, it's really important that each company keeps its own brand identity and runs independently. Being able to make your own decisions is essential for keeping what makes your company special and for maintaining your relationships with customers.
Define Boundaries: Making sure everyone understands what the partnership includes, and what it doesn't, helps stop either company from getting too involved in the other's main business.
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Viewing other companies as allies instead of just competitors can be really beneficial to your business. So, next time, maybe think twice before dismissing that ‘competitor’ knocking at your door.
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Thanks for reading, and see you next week.
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