Build, buy, ally: A gap analysis for SMBs to guide their future

The president of the Association of Strategic Alliance Professionals’ Canadian chapter helps address an almost inevitable business problem


He works for an organization whose initials are ASAP, but “as soon as possible” doesn’t begin to describe how quickly Phil Hogg hopes Canadian entrepreneurs will think about their optimal growth strategy.

Hogg is president of the Association of Strategic Alliance Professionals’ Toronto chapter, and a few weeks ago he was speaking on a panel at the Toronto Region Board of Trade about a sort of crossroads many small and medium-sized businesses (SMBs) in Canada eventually face.

Phil Hogg, ASAP Canada

Phil Hogg,
ASAP Canada

No matter what sector or market they’re focused on, he said, companies usually reach a point where they need to make a choice between building the business on their own, buying or merging with an complementary organization, or forming the kinds of alliances that ASAP guides its members about.

“You may have the best software developers in Kitchener-Waterloo,” he said by way of example, “but if they don’t know how to distribute (that product), it has no value.”

Hogg, who is also co-Author of the Financial Post’s “Successful Strategic Alliances” monthly series, doesn’t automatically encourage such partnerships in every circumstance. Instead, he suggested that successful SMBs use a mix of all three “build, buy and ally” options based on their specific needs and stages of growth.

“This is a gap analysis you need to do,” he said, admitting that 70 percent of all strategic alliances tend to fail within the first three years because they’re not set up or managed properly. He recommended weighing the options as follows:

Build: What organic growth is the company managing with its current tactics? Without some portion of organic growth, you may not have a viable entity for long.

Buy: What kind of investments in people, technology and other resources can you make in order to further growth? In some cases it will be using tools like SIP trunking or unified communications to gain a competitive edge. In other cases it might be time to think about an M&A. “You maintain control over everything,” with the “buy” approach, Hogg said, and it may be appropriate for the long-term outlook of the company.

Ally: Whether it’s a partnership to further sales, distribution, marketing or some other aspect, this can be the quickest route to results, Hogg said. It doesn’t mean you’ll ignore organic opportunities or continue to purchase what you need to be successful, but it’s worth exploring who has the expertise, IT or other elements that can accelerate results.

In other words, Canadian SMBs should do whatever it takes to get business done ASAP.

 

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