A recent study has revealed that strategic partnership is as important as an innovative idea to the success of small businesses.
Commissioned by BT Business, the research was compiled by Alain Samson and Thorsten Roser from the London School of Economics and compared two successful companies with a business that failed.
The Body Shop, the ethical beauty retailer sold to L’Oreal for £652m, and Last FM, an internet radio and music community that was recently sold to US media giant CBS for £140m were compared with Webvan, an online grocery business that went bankrupt in 2001.
Predictably, the findings showed that to set themselves apart, businesses should find the “X factor” within their market. The Body Shop was upheld as a prime example, with its beauty products capturing the current consumer trend for ethical buying.
However, collaboration with other companies was also defined as equally key to success. While many businesses regard independence as important, it is also necessary to acknowledge the difficulties a solitary venture can face.
The report cites Webvan as an example: while popular, the main mistake the company made was to overspend on infrastructure instead of partnering with existing supermarkets, and consequently the company exceeded its sales growth.
Another key factor for success is the outsourcing of services, the report found.
“With so much entrepreneurial talent in the UK, many people are looking to start up their own businesses,” said Bill Murphy, managing director of BT Business.
“Alongside having great ideas, businesses need a support team to help them concentrate on what they do best.”
