The Synergy of Strategic Partnerships: When 1+1 Equals 11

OK bear with me because, maths.  But I really believe that when it comes to collaboration 1+1 truly does equal 11.

Collaborating with peers, competitors, and businesses sharing a similar client base has been the cornerstone of success for Lantern Partners. Over the years, I have seen firsthand how these collaborations can create synergies that go far beyond simple addition; rather, they amplify, until 1+1 actually equals 11.

In the competitive landscape of modern business, the notion of partnering with competitors might seem counterintuitive. However, the right strategic partnerships can be a game-changer! By combining our strengths and resources, we’re able to collectively deliver great results for clients. The key to successful collaborations with competitors really lies in finding areas where our skills and experience complement each other.  And crucially when our business values and customer approach are aligned.

One of the greatest benefits of these collaborations is the expansion of our reach. By tapping into each other’s client bases, we were exposed to new audiences and potential customers who might not have been accessible before. This has a great impact on revenue but most importantly increased trust and credibility with our clients, as they saw that we were willing to work together for their benefit.  We walked the talk.

In addition to partnering with competitors, forming alliances with a variety of businesses sharing a similar client base has been similarly beneficial. As trusted advisors to our clients and with a deep knowledge of their business and challenges, we are well placed to advise where they need to tap into niche expertise.

Perhaps the most intangible yet crucial benefit of strategic partnerships is the learning experience they provide. Working closely with other businesses in the industry exposed us to new perspectives, approaches, and best practices. It encouraged a culture of continuous improvement within our organization, making us more adaptable and innovative in a rapidly changing business environment.

To make these collaborations fly, effective communication and trust are vital. Open and transparent discussions about shared goals, expectations, and responsibilities are crucial from the outset. 

As a business owner, I have experienced the tremendous impact of strategic partnerships on the growth and sustainability of the business. By embracing collaborations with peers, competitors, and businesses with a similar client base, we were able to harness the full potential of synergies. The idea that 1+1 equals 11 perfectly encapsulates the notion that, together, we achieve far more than the sum of our individual efforts.

By joining forces with like-minded entities, we unlock a world of opportunities that wouldn’t be accessible alone. The benefits span from increased market reach and customer engagement to enhanced resources, cost efficiencies, and valuable learning experiences. As business owners, we must embrace the potential of collaboration and recognize that when we synergize our efforts, 1+1 truly equals 11.

Time to review your expenses?

One of the most important things you can do to ensure your finances are in good shape is to review your expenses. It’s important to do this on a regular basis, not just when you’re encountering problems. And particularly at the moment, building up a cash buffer for unexpected future expenses is an important business discipline. 

Here are some tips on how to review your business expenses:

  • Start with the basics
    The first step in reviewing your business expenses is to make sure you have all the relevant information on hand. If you don’t have clear information it’s difficult to make the right decisions! Once you have everything in one place, categorize your expenses into different buckets such as direct cost of sales, marketing and advertising and overheads (rent, utilities, and travel). Once you have categorized your expenses, start analysing them. Look for trends in your spending and identify areas where you can reduce costs. For example, where have costs started to creep up and what costs are no longer required or providing the appropriate value for your business?


  • Negotiate with suppliers
    Negotiating with suppliers, particularly those you spend frequently with, is an important way to reduce costs. You may be surprised at how much you can save by simply asking.  This includes lenders as well as service providers. And don’t forget to shop around for the best deal on a new product or service by sourcing comparative quotes.


  • Use technology to your advantage
    Technology can be a powerful tool for reducing expenses and can be used in a number of ways. Online accounting software, like Xero, allows you to track your expenses quickly and easily.  Time spent with your bookkeeper making sure expenses are categorised correctly at the outset can save you hours of time on the analysis. Reporting software such as Spotlight or Fathom can generate instant reports from your accounting software to visually show you trends and track key metrics.


  • Review your subscriptions
    You know that gym membership you bought at the beginning of the year or the streaming service you signed up to and meant to cancel after the free trial? Business subscriptions, like personal subscriptions, can really creep up if you don’t keep an eye on them. Review all of your subscriptions and memberships. Cancel any that you don’t need or aren’t using. Also, check that you are on the appropriate package for your business now. Have you signed up to a premium package and don’t use the premium features? Or have you increased your number of users and should now be taking advantage of volume discounts?


  • Implement cost-saving measures
    Identify areas where you can implement cost-saving measures and reduce wastage. Some examples are:
    ◆ Review your inventory management system to ensure that you are not overstocking or understocking products, which can lead to waste or missed sales opportunities.
    ◆ Review your insurance policies and contracts to ensure that you are not overpaying for coverage you don’t need or can source at a lower cost.
    ◆ It sounds simple but implementing energy-saving measures in the office such as turning off lights, computers, and other electrical equipment when they are not in use can go a long way – particularly at the moment!
    ◆ Outsourcing: Hiring freelancers or outsourcing certain tasks can be more cost-effective than hiring full-time staff, particularly if business needs are variable or uncertain at the moment.


What can you implement today to run a little leaner?

Small changes add up!

When is the right time to engage a virtual CFO for my business?

Picking the right time to engage a virtual CFO can be tricky, but we find there are a few key signs that a business is ready for additional support.

For a founder those signs are:

You’re growing but you still never seem to have enough cash

Fast growth can be one of the trickiest times to manage as your business scales up as often the cash goes out the door before the revenue comes in. Having a clear handle on your cash flow forecast and knowing what levers you can pull if the projected revenue doesn’t eventuate as expected is really critical to long-term sustainability. In order to grow successfully you need to have guardrails.

You’re spending precious time in spreadsheets when you know you should be running the business

In the early days of a business, the founder is often wearing the CFO hat. The transactional work is outsourced but having a handle on the financial projections, budgeting, and assessing funding requirements sits with the CEO.  As the business grows it isn’t the best use of founder time.

Your financial system isn’t giving you all the answers you need. You know there are more

Having the transactional data correct is an essential first step.  But to really grow the business you need to extract the insights from that information. What is that data telling you about the health of the business and where to go next?

Your business is branching out into more unknown or bigger territory

As your business grows there will likely be more unknown territory.  Whether it’s venturing out into new business streams, new customer types, or new geographies. A CFO steps in to help you assess these scenarios and provide commercial and strategic guidance in decision-making.

You’re planning on selling your business 

Most founders we work with haven’t sold a business before. And preparing a business for sale takes time and careful planning.

If these thoughts are keeping you up at night let’s chat.

I have an accountant – why do i need a CFO?

The challenge with any industry when you’re looking in from the outside is to understand the different roles that make up a particular profession. And I know I’ve been guilty of that when I’ve looked at other professions.  

Often when businesses say they have an accountant they mean a tax accountant. A tax accountant structures your business effectively for tax, and deals with your year-end tax return filings and sometimes other compliance filings.

Businesses also often refer to their bookkeeper, insourced or outsourced, as their accountant.  

A bookkeeper will generally cover the following tasks

  • Codes the transactions to your general ledger (eg. Xero)
  • Accounts receivable – issues and chases payment of invoices
  • Accounts payable – logs and pays supplier invoices 
  • Payroll
  • Compliance filings (eg. BAS and payroll-related filings)

Broadly a bookkeeper is responsible for day-to-day transactions and ensuring that the financial data is correctly reflected in the business. The focus is on what has happened rather than what will happen.

The forward-looking lens is where your CFO steps in.

A CFO provides commercial and strategic finance leadership to support your business growth. They will be responsible for 

  • The “so what” of your numbers.  What are your financials telling you about the health and direction of your business? What story are they telling you?
  • Projecting your financial performance based on historical information and planned investment
  • Running scenarios that show “what if” the business makes certain choices or is impacted by certain variables (eg. loss of a key customer or slowing sales)
  • Managing risk, particularly financial risk, within the business
  • Developing or evolving processes to support business growth and allow it to operate effectively
  • Managing relationships with key financial partners; tax advisors, ATO, banks, lenders, and investors.

What financial support does your business have today and what does it need for tomorrow?

Key considerations on making the move overseas

So you’ve set your sights on expanding overseas – go you! 


But what are some key considerations to ensure that the move goes smoothly?

What’s your objective?


Number one on the list is to get clarity around what you are trying to achieve with the overseas expansion and the level of risk you are willing to take in carrying out that objective.


If you are at a testing stage do you need to set up an official presence or can you set up a sales channel to test demand first?


Do you want to lock in an anchor client before you commit to that territory?


Getting clear on these aspects will guide the following decisions you make and the timing of acting on those decisions


Seek tax advice for your plans


Seeking tax advice before you commit to a plan will help minimise painful mistakes or expensive unwinding parts of your setup later down the track.


If you are going to set up an entity overseas who are the shareholders in that new entity? Is it the existing main operating company or direct shareholders or is now the time to look at a holding company structure?


If you don’t set up a formal entity overseas there are still actions that could result in the local tax office assessing that you have set up a permanent establishment which brings with it many of the same tax consequences as setting up an entity. Understanding the parameters to operate within in the early days of expansion are important.


As the founder or major shareholder, if you are going to play a key part in that expansion and are going to base yourselves overseas for a time make sure you understand the personal tax consequences that might be triggered in doing that.


What funding is available for you to support your overseas expansion?


There are a number of government related schemes available to support expansion overseas. 


Export Market Development Grants are accessible through Austrade are available to support expansion in 3 tiers

  • Tier 1: Ready to export
  • Tier 2: Exporting and expanding
  • Tier 3: Exporting, expanding and strategic shift


Export Finance Australia are the Government’s credit export agency and can provide loans, guarantees,bonds or structured financing for a variety of different investment criteria.  They are generally more accessible and at more attractive terms than commercial options.

Other options to fund growth are

  • Capital raise
  • Commercial loan
  • Good old operating cashflow!

But in order to work out how to fund expansion first work out your plan to work out how much you need to fund. 


How do i employ/engage resources overseas?


This is a big question for most businesses looking to expand overseas and there are a range of options.


Direct employment – If you set up an entity overseas then you can employ or engage directly.  In order to stay on top of your compliance obligations it is advisable to engage a local outsourced provider to run your payroll.  


Employer of Record (EOR) – This is a (relatively) new way of engaging resources that allows you to do it in a way that shortcuts the usual employment infrastructure (ie. setting up bank accounts, government accounts for compliance etc).  Technically the employees are not yours but the EOR issues the employment contracts and takes care of all employee and compliance responsibilities.  It comes at a cost but less than setting up an employment entity yourself and most importantly ensures you stay on the right side of the law in an unfamiliar territory.  


Consultants – A valid option for a first step into a new territory and on the face of it the lowest touch.   However most countries have a similar view as the ATO in terms of the classification of employees and contractors so you may unwittingly become an employer just based on the nature of the relationship.  Another reason why so its important to get the right advice when picking this option.


Do you have the right local support?


We often assist our clients in getting the right local support in country.  Our international networks extend to tax and accounting, legal and HR support to ensure to make those first steps into a new territory without putting your existing business at risk!


Small differences in legislation or typical business practice can be the difference between success and failure in the early days.


What are the cultural differences in life and business in your new territory?


Even in countries that on the face of it might be quite similar can throw up unexpected challenges.  Particularly if on the face of it you speak the same language.  This chart has been doing the rounds for a few years and always makes me laugh as well as being a very good illustration of cultural differences in communication!   Having grown up in the UK i’m always devastated when someone starts a sentence “With the greatest respect…..”

Read more about that here: What the British really mean when they say things and what other people hear

Cultivating a support network of business owners who have ventured into your new territory before is a really great idea.  They will be full of tips and tricks on avoiding, and not creating, minefields!