joint venture marketing
Joint ventures have quickly become one of the fastest and most powerful ways to grow a business, but they are not without their share of risk. Some statistics suggest that less than half of all joint ventures survive less than four years, which is rarely enough time to see the true benefits of a successful partnership.
To ensure your joint venture is a successful one, we have some tips for minimizing risk in this sort of strategic alliance.
Establish a Common Purpose
The first step in minimizing risk in your joint venture is to ensure both partners are on the same page right from the beginning. This means that both JV partners need to be explicit about why they want to enter the joint venture in the first place and what they hope to achieve from their strategic alliance. If you both know the objectives up front, you will be less likely to suffer from unmet expectations later in the process.
A Comprehensive JV Contract
Many joint ventures dissolve because there is no accountability between partners. This makes it easy for one company to escape the joint venture with sizable benefits, while the other company merely feels put upon and taken advantage of.
If you are in this situation, get the terms of the agreement down in a contract that both JV partners sign. This protects the interest of all companies involved and provides recourse if one partner does not have his expectations met sufficiently.
Input from Both Partners
Joint ventures become much less risky if both partners are equally invested in the agreement. This means that each company should bring its own set of talents and resources to the table to ensure the partnership is as successful as it can be. When both partners put something of themselves into the joint venture, they will be more likely to stick with the partnership until the end of the venture.
Proper Leadership for the Joint Venture
Many companies fail to establish the proper leadership when they create a joint venture, which leaves this entity to flounder on its own. Create a leadership structure that holds all parties accountable and guides the joint venture into a successful enterprise. Once the leadership is set, communicate with employees of both companies so they know who to report to when working directly with the joint venture.
Ongoing Communication between Partners
Once the wheels are in motion, ongoing communication between JV partners will ensure that the venture continues in an upward direction. Communication minimizes risk by allowing both partners in the agreement to address concerns and obstacles for the joint venture as soon as they arise. Regular attention to the partnership will greatly enhance your odds for success.
Joint ventures can be profitable propositions, but they also entail their share of risk. To minimize potential loss from your joint venture, follow the steps above to properly establish the joint venture structure and provide regular maintenance so your partnership will be more likely to thrive and grow.
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.
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