5 Ways to Assess Joint Venture Risk

joint venture marketing Joint ventures can be a highly effective way to promote your business, but not every professional partnership you choose will bring the same level of success. Some joint ventures just seem destined to make money, while others remain flat throughout. To help you make good choices about your next joint venture, we

joint venture marketing

Joint ventures can be a highly effective way to promote your business, but not every professional partnership you choose will bring the same level of success. Some joint ventures just seem destined to make money, while others remain flat throughout.

To help you make good choices about your next joint venture, we have five ways to assess the risk of a potential partnership.

What is the Competition?

It’s very hard to compete with larger, established companies in a single industry, so don’t expect your JV partner to be able to play with the “Big Boys” if he is still a small start-up. These smaller companies simply cannot compete with the massive advertising budgets and popular branding that many of these big companies have developed. Instead, look for a partner in an industry with other start-ups to go up against.

How is the Industry?

Industries rise and fall in the marketplace. Consider the vinyl album and the word processor. When you hit the market right, you can seize the opportunities that growing interest in a new trend provides. If the market is over-saturated, or the industry shows signs that it’s on the decline, look for a different partner for your endeavor.

What Products Do They Offer?

Consider the product that your potential partner sells in the market. Is it a hot commodity, or rather slow to gain popularity? The more popular your JV partner’s product, the more traffic your products or services will see from the promotion on his website.

If you want to reap the greatest value from your joint venture, choose a partner that already has a product that is attracting a crowd. The value of the product should also come into consideration, since over-priced products may never sell as well, no matter how popular they are.

What is the Financial Status of the Company?

While you want to look at the profit margin of a potential partner first and foremost, it’s also important to assess how dependent on market fluctuations he might be. If he’s heavily in debt or relies on investments too heavily, his business is much more likely to weaken due to circumstances beyond his control.

The type of product will also determine how resilient your potential JV partner might be, since some goods and services are more recession-proof than others.

What is the Management Team Like?

A company is usually only as good as the people in charge, so make sure you are teaming up with a competent management team before signing on. Take the time to meet with management personally to find out if these are people that you want to work with. Learn about their level of training and experience to determine if they are qualified to lead the company into success.

Joint ventures are not without their share of risk, but there are plenty of steps you can take to minimize it. With these steps, you reduce your joint venture risk and increase your odds of a successful, profitable partnership.

christian fea is CEO of Synertegic, Inc. A joint venture marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.

To discover more joint venture marketing Strategies join his free report on joint venture marketing.

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