Growing Canadian Businesses through Strategic Partnerships
How strategic partnerships provide synergistic benefits and access to government funding.
When strategizing ways to grow and boost competitiveness, very few companies consider working with external organizations. But whether for short-term projects or long-term relationships, collaborations can build synergistic benefits for all who’re involved and greatly improve the potential for success. Partnering with other businesses or academic institutions can open the doors to new possibilities that are unachievable for individual businesses.
Take for example Greenfield Global who is a leader in the production in specialty alcohols and Canada’s largest producer of ethanol. Greenfield maintains four Canadian processing facilities, including one located in Chatham, Ontario. This facility has recently been upgraded to pipe waste products including heat (steam) and carbon dioxide underground to Truly Green Farms, a greenhouse tomato producer located across the road. In return, Greenfield will receive organic waste from the farm which it can process and turn into alcohol.
By establishing this partnership, both companies will reduce the amount of waste diverted into the environment and lower product input costs. By extension, both companies will increase profitability and be more competitive for years to come.
This is just one example of how strategic business partnerships can lead to positive outcomes for Canadian organizations. How will yours leverage collaborative projects to grow?
Why Partner with Other Businesses and Organizations?
Few Canadian small and medium-sized enterprises (SMEs) engage in strategic alliances; this is a lost opportunity. Research suggests that corporate alliances generally account nearly a third of revenue and company value for those maintaining good working relationships. The ability to share market intelligence, achieve synergistic benefits, and access a wider customer base are just some of the most common benefits that lead to increased competitiveness.
Types of Strategic Alliances for Businesses
Collaborative business agreements can take many forms. Some of the most common types include:
- Joint Ventures: An agreement by two or more parties to undertake a certain project as a single entity. Each partner has an equity stake in the venture and shares revenues, expenses and profits.
- Distribution/Affiliate Marketing: A fee-for-referral agreement where one partner uses another’s platform or audience to perform marketing activities. As marketing leads to tangible sales, a pre-defined amount or percentage of sales is directed back to the partner whose platform/audience is being used.
- Outsourcing: Coming to an agreement where one partner performs services or completes activities for another partner. Manufacturing activities have been commonly outsourced in the past due to cheaper international labour costs; however, are less frequent now with the introduction of highly efficient manufacturing automation systems that make manufacturing in Canada a profitable activity. Outsourcing can extend beyond manufacturing though. Almost any company function can be outsourced, from recruitment, marketing, accounting and beyond.
- Technology Licensing: An arrangement where trademarks, intellectual property and trade secrets are licensed to an external firm. This option is used mainly as a low-cost way to enter foreign markets.
- Research and Development: Although these could technically fall under the joint venture category, R&D partnerships are often highly purpose-driven and generally have an earlier maturity date than other types of joint ventures. Once a technology or solution has been developed and implemented, this usually signals the end of the relationship. Some research alliances can extend beyond single projects, however, if follow-ups or continuous improvement are part of the agreement.
Partnership Spotlight: Greenfield Global and Truly Green Farms
In Chatham, Ontario, a newly-formed joint partnership between Greenfield Global and Truly Green Farms is greatly enhancing each entity’s ability to grow and improve profitability. These organizations have come together specifically to address each partner’s greatest challenges: how to reduce waste and lower input costs.
The project involves installing a pipeline that will transport Greenfield’s steam and carbon dioxide to Truly Green where it will be used to provide heat and improve growing conditions. In return, Truly Green will send organic waste to Greenfield where it can be turned into biofuel and sold for high return.
Both companies will be able to produce more, and deliver more innovative products through the process. While Greenfield lowers product input costs and researches new types of fuel compounds, Truly Green lowers energy costs and improves production rates.
In partnering together, these seemingly unrelated businesses created significant synergistic benefits that help each other become more profitable and environmentally responsible.
Better still, this type of collaborative innovation can often be supported through Canadian government funding. In the case of Greenfield and Truly Green, a $3.7M government loan was awarded to finance the pipeline’s construction so that the two companies (conveniently located across the road from each other) could be physically joined.
Resources to Support Strategic Partnerships in Business
If your organization is searching for a partner to support collaborative projects, consider the following options:
Research and Development Partnerships with Academic Institutions
While some businesses assume that research partnerships can only be done with other companies, this is not necessarily the case. Partnering with post-secondary research institutions is a great way to access the technical expertise needed to achieve successful project outcomes.
Canada is home to many of the world’s leading research institutions, which makes accessing a qualified partner fairly easy. Businesses can contact local post-secondary institutions to propose their research project and learn if they have facilities to accommodate the type of work being done. Often, a professor and team of students will work to achieve a desired outcome such as development of a new technology, or building on theoretical knowledge that can be applied within the business.
There are an abundance of research grants and funding for businesses to enter post-secondary research partnerships. These Canadian government funding opportunities can support a range of research projects spanning 6 months to five years in duration.
Local Economic Development Offices and Chambers of Commerce
Businesses can connect with other firms most easily by working with business-expansion advocates, such as local economic developers and Chambers of Commerce.
Regional governments often employ economic development officers who work with businesses to reduce barriers to investment. These organizations help attract and nurture world-class companies to the area to boost employment and improve the economic success of certain areas. Invest in Chatham-Kent is one of these organizations; it actively supports investments in the area handling inquiries and consultations, leading networking events, and advocating for the unique strengths of local economies, such as access to skilled labour, land, and transportation systems.
Likewise, Canadian Chambers of Commerce advocate for business success on a local, regional, and national level. These non-profit, membership-based organizations foster business-friendly policy development by governments and extend support to businesses through educational seminars, member advertising, and small business events. They are integral for local economic development and are well-aligned to the needs of local businesses.
Small Business Funding and Resources Newsletter
Finally, Canadian businesses can learn more about how to strengthen their partnerships and access government funding by registering for Mentor Works’ weekly small business funding newsletter. Each week, business leaders can receive updates on how small businesses are using collaborative relationships to grow and thrive, in addition to specific government funding programs to support collaborative projects.
Register for the Government Funding Snapshot™ newsletter to access free, timely insights on how to grow your company.