joint venture marketing
As you move forward with your joint venture, there are always risks along the way. The key with any business practice is to identify risks and take precautionary measures to control and avoid them. Below are four good ways you can control risks with your joint venture so you can enjoy a long and fruitful partnership.
1. Use existing resources rather than paying for new ones
Finding sources for capital can be difficult and costly. Why not use existing resources as much as possible when you form a JV? Rather than buying a new delivery truck for your JV, use an existing one from your company. The same holds true for computers, equipment, supplies, and even human resources. Utilize as many resources as possible at your disposal, and your JV partner should do the same. This will save you money down the road in interest charges and unnecessary capital expenses.
2. Reduce or eliminate your overhead
Overhead can be an incredible drain on your joint venture budget, requiring constant inflow of cash to patch the outflows. Try to operate with as little overhead as possible or eliminate it completely. This is where using existing resources can come into play by using and sharing existing office supplies and/or office space. Use an existing cubicle in either your or your JV partner’s office for your administration. Any expense that is related to general or administrative costs is overhead. Keep it low.
3. Choose business associates carefully
One of the biggest risks in business is trust. You must trust others to do business ethically and trust that they will not take advantage of you. However, these types of business people exist – which is why it is so important to carefully choose the business associates on whom your JV depends. Delivery companies or distributors should have the highest reputation. Get your JV business supplies from a vendor who has great prices, but not so cheap that your product suffers. JV success depends on the quality of your product or service and your reputation. Protect them both with the choices you make.
4. Don’t depend on government contracts
There can be big money in government contracts, and a lot of businesses do well with work awarded by federal or state government. However, government agencies have a tendency to eliminate contracts at a whim for budget reasons or even disappear itself at the decision of the Appropriations Committee. If you can acquire government contract business, that is certainly fantastic. However, make sure you diversify your business so that you don’t depend wholly upon government work.
A JV business can run smoothly and efficiently. Shared resources and smart decisions are the key to making a JV a success. However, you must form and implement strategies to reduce and control risk. Use little new capital. Operate efficiently. And choose your business associates and deals carefully.
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 joint venture marketing Wealth Report.