joint venture marketing
A joint venture is an excellent way to escalate profits with little upfront cost as long as the joint venture agreement you create is a beneficial one. Unfortunately, too many joint ventures begin without adequate thought or preparation, leaving them floundering dismally in no time at all.
To help you and your JV partner set yourselves up for success, we have five questions to discuss before anyone signs on the bottom line.
Who is Your Partner?
You may think you know a potential partner well enough, but until you have performed a thorough background check, you should avoid any sort of formal agreement. Find out if your potential partner has any type of criminal record, individually or in his business dealings.
While most business owners are on the up-and-up, those who are not just might be looking for a joint venture to legitimize their own company.
Who is Your Customer Base?
Joint ventures are most successful between businesses that offer related products that are not in direct competition with one another. This ensures you are catering to a similar target audience and that the advertising dollars you put into the joint venture benefit both partners equally.
Take the time to fully analyze the customer base of both businesses. You want to know that the target audience is similar enough for the venture to be successful.
What are Your Goals?
Joint ventures may come with different goals each partner is hoping to achieve. This could make it difficult to define success in the relationship. Ask a potential partner what he wants most out of his business, and what he plans to do to achieve it. Make a list of what each of you hope to get out of the joint venture. Look for similar goals up front before launching into an agreement.
What are the Rules?
Nobody likes to talk about rules; they squash creativity and limit the scope of the endeavor. However, rules are absolutely necessary in a joint venture to ensure the interests of both parties are adequately protected.
The rules to which you agree for your joint venture should be clearly spelled out in a written contract. If you aren’t sure what the rules should be, talk to an attorney that specializes in the specifics of a JV.
How Long Will it Last?
Some joint ventures are open-ended, while others have a set date to disband. Even if you don’t want to put an end date, it’s a good idea to set a date when you will review your partnership and determine whether it should continue at that time. By creating a definite time frame, you avoid a problem with one partner wanting out while the other is still benefiting from the agreement.
Joint ventures are highly successful methods for growing businesses, as long as they are used with the best interests of both companies in mind. By taking time to establish the parameters of your agreement up front, there will be fewer misunderstandings and a greater likelihood of success.
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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