For many business owners, collaboration removes the daunting concept of doing everything on their own. From finances to service and logistics, setting up and running a business takes numerous skill sets, which makes a more collaborative approach to business growth an attractive option.
It’s a financially viable strategy too, with new research from American Express finding mid-sized businesses collaborating on joint initiatives were, on average, $430,000 better off.
For the research, called the 2017 American Express Business Collaboration Index, American Express surveyed more than 700 executives from Australian mid-sized and small businesses across 15 different industries.
The research found that businesses with relatively low levels of collaboration also had lower expectations for growth in the coming year.
Whereas, businesses that were more collaborative had higher expectations for growth, as they had also experienced far greater revenue growth in the last 12 months, up 64%, compared to low or un-collaborative businesses which saw 26% revenue growth.
Martin Seward, General Manager and Vice President, American Express Global Commercial Payments, thinks businesses that aren’t open to collaboration are holding themselves back from seeing opportunities to do business more effectively.
“The research found less collaborative businesses tended to have a less optimistic view of future performance. They tended to be much more conservative in their outlook,” said Mr Seward.
“Collaboration allows businesses to join the dots to create unexpected opportunities.”
The report found businesses that were particularly successful were those seeking out non-traditional partnerships from collaborators outside of their direct industry. It highlights American Express’ partnership with Apple – to be the first to bring Apple Pay to Australia – as an example of the fact that sometimes strong partnerships can come from unexpected places.
While the deal between giants like American Express and Apple might not seem as relevant to mid-sized businesses in Australia, the report finds collaboration to be beneficial regardless of the business’ size, and encourages big businesses to consider the role of smaller businesses in overcoming challenges.
The retail and logistics industries in Australia are currently facing uncertainty around Amazon’s imminent arrival, but the opportunities for collaboration are ripe as well.
Online retail spending reached $22.23 billion in the 12 months to March 2017, according to the Australian Bureau of Statistics, leading to an increase in demand for parcel delivery.
A collaborative business model can save small to mid-sized businesses from having to invest in their own infrastructure or resources.
On a larger scale, a great example of this is the logistics platform FreightExchange, a peer-to-peer transport business that allows freight companies to list any spare capacity they have for others to utilise.
Customers can also use the platform directly to ship goods. The service aims to provide more efficient supply chain options for businesses and customers, and less wasted space or congestion on transport routes.
On a smaller scale, in the past small businesses may have had to stretch themselves to hire a delivery driver or someone to organise and prepare parcels, which could be an investment risk if demand is seasonal or inconsistent.
The gig economy has given small and medium businesses a faster way of meeting changing demands by tapping into a transient workforce during busy times, and the benefits for small businesses in this model are twofold.
Firstly, it allows businesses to meet changes in demand by engaging a temporary workforce. AI Group claim it takes 2.7 days to hire a freelancer from a talent marketplace, compared to 34 days for normal recruitment methods.
Secondly, businesses benefit from the customer-client relationship dynamic, as freelancers must complete their tasks to a reasonable or high standard in order to get paid. This accountability improves the quality of the labour in the short-term, and allows businesses to effectively measure the value of the investment.
There are now numerous platforms that facilitate this collaboration model. A great example is small restaurants using Deliveroo rather than hiring their own driver. Deliveroo takes a cut from each order they process for restaurants, the driver can choose their hours and work location, and restaurants can increase their sales by reaching a new market (people at home, looking online for food delivery).
Collaboration is giving more Australian businesses access to growth opportunities without the investment and competition risks that would usually deter them. This is proving to be a key competitive advantage as big international players enter the local market.
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