Why Small Businesses Should Collaborate

Brad Dorsey

5 min read ·


Business can be described as “dog-eat-dog.” Everybody is out for themselves and can only succeed by putting their own interests first, right? Not so fast. This two-part series first shares why small businesses should collaborate before exploring several ways to do so.

Competition is a recognized part of doing business. It can drive small business owners to do better and achieve more. Yet, this doesn’t mean entrepreneurs need to work exclusively on their own. In fact, it can be very useful to partner with other small businesses to reach your goals.

Why should small businesses collaborate? The advantages are too good to pass up. These include:

  • Gaining new inspiration from creative partnerships
  • Growing your network
  • Learning from people with different skills and backgrounds
  • Saving money
  • Increasing revenue
  • Helping solve problems
  • Improving customer recognition
  • Supporting the success of the larger business community in your area


Gaining New Inspiration From Creative Partnerships

Working with another business—whether directly in your industry or one that shares the same street as you—can give you fresh ideas. We all gain from getting to know others and how they are doing things differently. 

What do a donut shop and a hardware store have in common? Not much in the way of product. Still, working together on a cross-promotion because they share the same shopping center location, the business owners might get new marketing ideas. Or, by venting to one another about a staffing problem, a fresh approach to employee engagement emerges. You don’t know what great ideas are out there until you talk to those other business owners!


Growing Your Network

Growing Your Network

Participating in a promotional event hosted by your local chamber of commerce or being part of a neighborhood pop-up festival can build your network. You can get to know other businesses. They could have those great ideas we just mentioned above. Or it could help you to learn some things from people with other skill sets, which we’ll discuss more next.

Collaboration-in-action example: A California wedding caterer started hosting tastings that also introduced couples to local wedding planners, photographers, florists, and location specialists. This helped them build a network (and goodwill among others in the industry) while making the process easier for the potential customer.

Working together with other entrepreneurs is also an opportunity to build your customer network. When you partner with another business, you gain credibility with their customer base. That helps get you in front of a new, different audience who might not otherwise have interacted with your business.


Learning From People With Different Skills and Backgrounds

Every business is run differently. Each entrepreneur has a varied background. By participating in small business collaborations, you could develop a professional relationship with a business school grad. Or someone who used to be in banking. Or an individual with a much better grasp of supply chain or accounting than you have. 

Through your interactions with the larger group of businesses, you’ll gain access to new ways of doing things. Plus, you’ll get to hear others’ success stories and cautions and maybe save yourself some pain along the way as a result.


Saving Money

Small business budgets are tight. So, it can be useful to work together to get more bang for your hard-earned business dollar. Pooling funds to buy an ad or host an event can help make a bigger impression with limited funds.

You can also save money by not paying for every aspect of a promotion or event. By working together, you all can share the load with each other. Plus, things you might have had to pay for if going solo could be donated by the business owner who runs that type of business. 

Collaboration-in-action example: A gym approached an exercise equipment vendor offering to let its prospects do hands-on equipment trials at its location. The vendor gained a place to send potential customers wanting to try out their products, and the gym saved on the expense of purchasing fitness machines. 


Increasing Revenue

Good collaborations help your business to scale up. By sharing resources, you may be able to overcome obstacles that are slowing your growth or productivity. The partnership can promote innovation and teach you new ways to be profitable too. Plus, you’ll be growing your network of referrals and expanding your customer base. All this can help increase your business revenue.

The collaboration could also help your employee retention. Or, at the very least, combat burnout. Because now you’re no longer trying to do everything yourself. With small business collaborations, you and your employees can stick to what you know well or like to do. Alternatively, the partnership with another business might get staff out of their comfort zone. They could find they really appreciate being challenged in that way. 


Helping Solve Problems

Helping Solve Problems

Think of it as entrepreneurial crowdsourcing. You will encounter problems as a small business owner that you don’t know how to solve. Yet, those business owners you’ve partnered with in the past may have run into the same issues. You have a ready network available to ask for advice. Plus, they’ll be coming at the problem from different points of view, so you’ll gain a new perspective on the situation.

Being able to ask others for help is one of the big reasons to collaborate with others by joining a trade association. Learn more in “Why Join a Trade Association?


Improving Customer Recognition

You have your audience, and other businesses have theirs. Everyone is looking to build a brand and raise awareness with potential customers. Improving customer recognition is the most obvious answer to why small businesses should collaborate. After all, people trust the business they already frequent. So, when that business partners with yours, you gain an immediate credibility boost. 

Collaboration-in-action example: Two Nashville restaurants hosted a ramen showdown to support a city volunteer organization. The two vie for the same customers, but by advertising an important charity and making a game of their competition, they both gained exposure while supporting a good cause.


Supporting the Success of the Larger Business Community in Your Area

Small business collaboration can be a win-win for all parties involved. By working together with other entrepreneurs, you could be helping a new business launch or keeping a struggling one from having to fold. It’s part of being aware of the larger implications of what you do as a small business owner. 

Social responsibility is important among consumers today. They want to support businesses that help their community and are making sustainable choices. Being part of a community of businesses shows that you care about more than your own bottom line.


So, How Do Small Businesses Collaborate?

Now that we’ve covered why small businesses should collaborate, the next article in this series will provide specific strategies to do so. You don’t need to build your business solo. You can see success with the help of another entrepreneur. Of course, we have plenty of resources available to give you a leg up too.

Brad Dorsey