Why should smaller companies collaborate and what are the benefits? This question has nothing to do with the larger companies going out of business or being discouraged. This question should denote the fact that smaller companies usually struggle with obtaining clients, raising capital and most lack the ability to hire employees. Collaborating with a similar company could bring more capital and manpower. Where one is weak, together they are strong by combining resources. More hands make the load lighter. This gives both companies the opportunity of mutually benefiting from projects they work on together.
Collaborating also means, they can split expenses and cover more ground because they have a combined team. In the last 5 years, smaller companies that ventured into collaborative agreement, decided to cut overhead expenses by "doing away with" traditional offices and having their teams work remotely from home, or in a workplace environment like The Forum in Chandler, Arizona.
Smaller companies are generally not in a position to effectively compete with larger companies without first having a “queen” or “king” in their pocket. Meaning, smaller companies should have a trump card; a powerful, or very-well connected company or person in their corner willing to help them once they’ve secured a more solid foundation.
Here’s a great example The Shark Tank.
When these sharks, or “Angel Investors” evaluate the company requesting capital, they look for leadership i.e., who’s the captain leading the ship? Have they done this before? Why did they decide to do this (whatever “this” is?); does the public need the product the entrepreneur is offering? If so, does it work?). They want to know if there is any intellectual property (IP) i.e., patents, trademarks, etc., and is there proof of concept, and if so, how did it fair in the marketplace? These sharks also expect the entrepreneur to be willing to collaborate with other companies in their (the sharks) network, or portfolio. That could be a distribution deal with a larger company, they could be bringing on an entire management team from yet another larger company; or hiring personnel directly. There are so many collaborations happening behind the scenes that no one hears about, until massive success has been achieved.
Picking Your Own Battles in Business
It’s important for smaller companies to understand who their competitors are, the dynamic of their organization (who’s working with them? Who’s on their executive team or staff?); what are their strengths and weaknesses; what makes the larger company different from the smaller company; and what niche or gap did the entrepreneur of the smaller company find that caused him/her to create the smaller company?
Understanding your competitors, gives a smaller company leverage to understand what’s needed in order to compete. Could it be that the smaller company needs an executive team that match the credentials of the team of the larger company? Maybe it’s having a similar product that’s more affordable for a different target audience. The bottom line, smaller companies must be equipped with the right team, resources, niche product, or have found a substantial gap in the marketplace; or risk getting clobbered by larger competitors.
If you are an ambitious entrepreneur with something to prove, just know that you must have a loaded guns and shields of protection when walking on the battlefield to fight with a king and all of his men. So, pick your battles wisely.
Competition in Business – The Leverage of Larger Companies
Larger companies have the leverage of having a solid plan of action, the ability to raise capital by collaborating with an experienced executive team qualified to execute its plan, a marketing/media/PR team to advertise and promote its brand; and finally, by producing products or services needed by the marketplace and having the resources to distribute them.
Larger companies make it a point to stay on top of the research and development of a product or the marketplace to produce more up-to-date products for its customer base. However, some larger companies find more benefit in acquiring, or even collaborating with smaller companies that produce better products, or products that compliment its products. The idea is to expand its product line, or geographical reach in the marketplace to increase its bottom-line.
It’s true that larger companies often pounce on smaller companies they see as a threat. Many will seek to acquire its competitor; however, some simply don’t mind the competition and are ready to destroy its competitor at all costs to be and stay on top. Larger companies generally have larger marketing budgets and the capacity to offer discounts and products for less than their smaller competitors, some will even match the prices of the smaller companies and eventually take over the marketing opportunities the smaller companies simply can’t afford. When all else fails, larger companies will recruit the executive teams or key personnel of the smaller companies. Ruthless, or Business? Guess it’s a matter of perspective, but in America; it’s called “business” and survival of the fittest!
Collaboration “ALWAYS” Wins Over Competition
In today’s climate, collaboration stands out as the real campaign among entrepreneurs who were born at a time in history where the small guy has had enough of the bullying tradition of larger companies and organizations. Millennials and Generation X communities have made it a point to bring diversity to the forefront of personal and professional experiences, as well as making diversity a requirement for a more sustainable society. This is evident in the unicorn companies that are popping up out of nowhere, totally disrupting the way business is being done and bringing new technologies to the forefront.
We are now seeing more collaborations than ever before. Smaller companies are collaborating in order to reach a mutual goal and larger companies are collaborating to take over the marketplace. Either way, collaboration far outweighs the budget and headaches that comes with competing or trying to keep up with the Joneses of business, alone. Remember, teamwork – makes the dream work. To have a more sustainable company, smaller entities due well to collaborate vs compete.