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Buddy System

Would a strategic alliance be profitable for your business?

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This story appears in the June 2007 issue of Entrepreneur. Subscribe »

David Jacobson wanted to offer his credit union clients a sophisticated tool to help them make vehicle loan decisions. But his company, GrooveCar Inc., a $3 million supplier of automotive purchasing services that he founded in Melville, New York, lacked the financial and technical resources to buy or develop such a system. So the 43-year-old entrepreneur allied with a technology firm that had the right product and wanted to get into the credit union market. "They got us an amazing product that we didn't have to pay for," says Jacobson, who employs 17 people. "In return, they got relationships with credit unions all over the country."

A strategic alliance like Jacobson's, where two companies come together to accomplish a particular objective, is more than a supplier-vendor relationship. Alliances are on the rise, according to Gene Slowinski, director of strategic alliance research at Rutgers University, because they can give entrepreneurs and their partners access to technology, distribution and other valuables for less than it would cost to develop them in-house. Here's how to do it:

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