Barb Gamey found dozens of new clients. Linda Collier quadrupled sales in an export market. Cynthia Richards grew annual revenue by 15%. All three rank among Canada's Top Women Entrepreneurs — and all three have used strategic alliances to boost their businesses significantly.

In fact, more than a third of the 2009 PROFIT W100 say that they've gotten a leg up through strategic alliances — formal collaborations in which unique resources and capabilities are shared between organizations to create a competitive advantage. Of course, like marriages, strategic alliances have their privileges but also have their pitfalls. They demand a significant investment of managerial time and resources, so jumping in without doing your homework can be costly and ineffective. Take these five lessons from the W100 — think of them as premarital counselling — to ensure a fruitful union.

Marry for the right reasons 

Before you consider a collaboration, define your goals and determine whether, in the long run, it would be better to build internally or partner for that capacity. If you're trying to fill a gap in your business that will be essential to your survival, you might want to do it yourself. However, there are many situations in which it can be more practical — and profitable — to form an alliance.

Three years ago, Barb Gamey (No. 41 on this year's W100 list of Canada's Top Women Entrepreneurs) determined that a partnership would be critical for business development in the U.S. "We needed it because we aren't in the U.S. talking to U.S. companies ourselves,"says the president of Winnipeg-based Payworks Inc., a provider of Web-based payroll software. It wasn't long before she aligned Payworks with the third-largest provider of payroll services in the U.S. Fortuitously, the U.S. firm had already identified its lack of a Canadian component as a sales impediment; and, because payroll services is a volume business, an alliance was particularly helpful even for the larger firm. The companies set up a system in which leads are traded back and forth.

"They have U.S. companies with Canadian employees,"says Gamey. "We encounter Canadian companies with U.S. employees. So, we refer the U.S. component to them, and vice versa."

Catering to U.S. clients on its own would have forced Payworks to program its software application to address the differences between Canadian and U.S. laws, payroll calculations and banking infrastructure. "We haven't built the capability to go into the U.S. market,"she says. "For me to provide an equivalent service and to be able to deliver payroll services in the U.S. like my [large Canadian] competitors do, it made more sense to partner."The partnership has provided new clients and additional revenue for both organizations — accomplished at little out-of-pocket expense.

Similarly, Linda Collier (No. 65) concluded that she needed a strategic alliance in order to take advantage of considerable business opportunities in the Far East. Two years ago, the president and CEO of transportation company Tri-ad International Freight Forwarding Ltd. developed a partnership with a company similar to hers that operates in China and India to develop opportunities for both companies in each other's markets. Profits are split 50/50 between the partners. The alliance ensures better service for each partner's clients. The companies work together to make sure that freight is moving seamlessly between the countries for clients that are importing or exporting between them.

"We wouldn't be able to do it very effectively without a strategic alliance,"says Collier. "We'd be relying on either airlines or steamship lines to try to fill in the different pieces. With the alliance, we're sharing profits, so our partners have it in their best interest to ensure freight is moving cost-effectively and on time.”

The partnership has allowed Mississauga, Ont.-based Tri-ad to benefit from global business while circumventing some of the risk and expense of international development, including barriers to entry such as language and cultural differences. Since the partnership has been in place, Tri-ad has quadrupled its Far East business. The company has also improved margins by 36% in the foreign markets in which the alliance applies, driving down pricing by going in jointly with the partners to build contracts with airlines and steamship lines.  "Once we developed these alliances,"says Collier, "our overall margins improved in these markets, compared to no margin improvement in markets without alliances."

Don't settle until you find your perfect mate

To find potential partners, get referrals from other businesses, search industry organizations or network at conferences. Once you've found several with potential, take your time to establish the best fit. "There's an extensive due diligence you should do in advance to get a 360 of the company,"says Gamey.

It's essential, for example, to investigate your partner's corporate culture. "So many relationships fail because of culture clashes,"warns Gamey. "If the other business you're working with doesn't have a cultural fit with yours — it moves too slowly or they don't understand your brand or how decisions are being made — it's going to be very difficult for both partners to function within the framework of the alliance."