When trying to acquire new customers, there are many possible avenues to focus your time and energy into when starting a new business - encouraging referrals from existing customers, traditional advertising, social media, digital marketing, networking, and so on. When starting a consulting or service-oriented business, whether it's a trade skill, marketing, freelancing, legal, creative or technical, chances are that it's going to be impossible to be able to offer everything at an expert level.
That's when creating quality partnerships with other skilled professionals can help open the doors for your business to a lot of opportunities that could traditionally be missed. As a small web and app development agency, we were working very closely with a graphic design agency on website design projects when we were first starting out. We had actually toyed with forming a new marketing agency together, but ultimately we constructed the idea for our collective (named the Summit Collective).
What this came down to was a new umbrella brand that we could operate under to market ourselves separately as an agency with a much more comprehensive service offering than what we had individually.
How We Structured our Collective
Before we get into the details of all the benefits that this approach brings, it'll help to go over how we set up the Summit Collective. We had a lawyer draft up a memorandum of agreement, which was essentially a document stating that we would treat each other fairly and respectfully, along with things like our terms for referral commissions and a promise to provide other members with first opportunities to quote. So, nothing legally binding, no joint bank accounts, which meant plenty of flexibility and accessibility but with minimal investment or risk, and it came with a much more professional presentation than simply handing a client off to someone as a referral.
We then set out defining the roles we'd need for our collective that would complement our offerings. Between the two of us, we had branding, graphic design, user experience design, web and app development, and hosting covered. So we decided to start seeking partners in SEO, pay per click and digital advertising, marketing strategy, social media, photography and videography, and copy writers and editors, and more. We found other similar sized businesses that shared a similar culture and set of values that were onboard for this strategy. You may begin to see how this approach could work with some of the other business types we listed in the beginning as well.
The Benefits of Forming a Collective
1. Instant Expansion of Potential Customer Base
Now that you suddenly have more services and skills available to you in your back pocket, you have opened up your market capabilities extensively way past the niche services that you were offering. If branded and marketed well, you also now have a way to compete with companies much bigger than yours.
2. Full Service Offerings with Low Overhead
This approach gives you a couple of legs up over larger competition that might try to do it all, and one of them is the fact that you offer just as wide a range of expert services while maintaining lower costs due to decreased overhead. In our marketing agency example, we're not paying the salary for writers, photographers, etc., when they're not needed for the project. This can turn into a lower cost for your customers for similar results.
3. Everyone is an A Team - No Weak Links
One issue we see with larger companies that offer a range of services is that they're often not expert level at everything. Take an agency as an example, they might have an effective marketing and design team, but maybe their development skills are lacking, resulting in problems that their customers may not even be aware of until it's too late. If a collective is set up properly, chances are everyone in it is going to be experts at the service they offer, making it so that you're not only offering a comprehensive amount of services, but at a top level.
4. Keep it in the Family - Less Risk of Losing Business to Competition
One challenge you may run into with a customer by not having a larger offering of services is that they will eventually have to look elsewhere for them, and often the company they will begin to work with will also offer the same services as you and potentially try to elbow you out. If they're instead working with a member of your collective then there's no threat of that happening.
5. More Support than your Typical Networking Group
One of the benefits of having a tight knit group of business owners that are regularly working together is the sharing of resources and experience. Start up a Slack, have regular meetups to discuss what everyone is working on now and towards in their future, share recommendations and strategies for things like accounting, project management, hiring, etc. Within our own collective we often share access to software and other licenses, saving on some expenses.
6. Potential for New Revenue Streams
Since we have a referral and commission system for projects that we don't directly collaborate on, selling the services of members of your collective could turn into a new source of income. Not only are you handing your customer to someone you trust that will do a great job, you're also turning on a new revenue stream. Some members of our collective have even focused more heavily in a sales role to maximize this.
Wrapping Up
There's a lot of different ways that you could organize a collective, so the key is to do what works best for you, your customers, and your culture. It should strike a balance between simple outsourcing and full co-ownership of a larger business. In our own experience, we found that transparency is best, and customers generally think it's a really neat and innovative idea. It's an extremely cost effective way to kickstart your own business.
If you have any questions on forming one, or are interested in what we do at the Summit Collective, you can reach out to joren@embold.com or visit https://summitcollective.org/ and https://embold.com/ for more information.