joint venture marketing
After you’ve decided to enter into a joint venture and found a potential partner, the next step is the negotiation. “Give and take” is important to understand in the negotiation process; without it a successful agreement cannot be made. The power of a joint venture is only as strong as the negotiation behind it.
Tips for Effective Negotiations
Face-to-face interaction and tactics are key factors in a successful negotiation. Equally important is the proper layout and preparation of goals, benefits and risks of the venture. Keep in mind that in any successful negotiation, both parties walk away feeling they will benefit from the arrangement.
Perform extensive research on the type of business you’re preparing to negotiate with. If possible find out what problems they have and what their profit margins and resources are. Use the Internet as a research tool, read industry publications and talk to the company’s customers or employees. This research will help you be more effective in the negotiation process.
Learning everything you can about your potential partner is important, but being prepared to offer important information about your business is also important. Outlining the benefits of entering into a venture with your company for your potential partner as well as discussing what you hope to gain from the venture is a good strategy for negotiations.
Speaking of “give and take,” you should go into the negotiation process prepared to compromise. You should have the best- and worst-case scenarios along with the benefits of each case. As you begin the process, start off with the best outcome you hope for first. As the negotiation process matures, prepare to compromise, but do not lower your standards.
By leveraging existing resources instead of creating new ones, this will help both parties keep costs down as much as possible. If the venture does not work out as planned, both partners will not lose if they use their combined resources. Also pooling your resources can be an effective way to deal with each other’s shortcomings; what one company lacks the other company excels in.
Some other helpful tips are honesty and transparency between partners. Starting your venture on the right foot will ensure the longevity of the partnership. Regular contact with your partner is essential in making sure your current arrangement is going as planned and making adjustments as needed. Effective ventures are essential in business growth, profit increase and growing the customer base.
Put it in Writing
All successful negotiations end in writing a contract. The contract needs to include the overall goal for the joint venture, a timeline for the venture and the benefits each partner hopes to gain from the agreement. If a timeline is not solid, put a date down to revisit the JV partnership. Also include all fallback options. In the event the partnership does not work, both parties can make a clean break. A well-prepared contract is paramount. Each party should think about hiring a legal representative to help protect you and your potential partner’s interests.
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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