Self-storage business operators manage relationships on an ongoing basis with customers, employees, and suppliers. Businesses may also foster relationships with entities such as a property management company, management software provider, facility locator service, rental truck company, and financial institution.
A successful business relies on relationships to operate and thrive. Partnerships may arise out of these relationships, and some, but not all, rise to the level of strategic alliances. While relationships and partnerships are important to the business, it is critical to understand what makes an alliance strategic in order to give it the proper level of attention and maximize the benefits.
Characteristics Of A Strategic Alliance
Author Jason Wakeam asserts in the Ivey Business Journal that there are five criteria that differentiate a strategic alliance from other types of partnerships:
• Critical to the success of a core business goal or objective
• Critical to the development or maintenance of a core competency or other source of competitive advantage
• Blocks a competitive threat
• Creates or maintains strategic choices for the firm
• Mitigates a significant risk to the business
In addition, strategic alliances require that each party have something invested in the partnership such as money, resources, or time. Each party needs to identify an individual who will be accountable for ensuring that the entity he or she represents fulfills the agreed-upon deliverables and timetables. Finally, strategic alliances require good communication to ensure that goals are understood and disputes are resolved to the satisfaction of both parties. Going into an alliance with a selfish mindset is a sure way to ruin the partnership. Strategic alliances flourish because both parties make an investment and both reap rewards.
Risk Management Considerations
From a risk management perspective, it is important to do proper due diligence when seeking strategic alliances within and outside of the self-storage industry. It is critical that both parties fully understand the terms of the partnership.
Because strategic alliances involve written contracts, a self-storage operator should be sure to include his or her attorney and insurance agent in the negotiations to ensure that the interests of the business are protected. An insurance agent can offer valuable assistance by identifying potential exposures created by the terms of the contract and suggesting proper coverages and adequate limits to address identified risk appropriately.
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