Small business owners that are looking for their big break in reaching new clients quickly are wise to develop joint venture partnerships with companies that can instantly integrate their product into existing offerings. This is the type of partnership that will limit the amount of interaction a company will have with the end customer, however it drives sales numbers so it’s worth the loss in branding to partner with a top tier company that can really accelerate growth quickly.
Be conscious of who you partner with in these types of relationships. If you have developed a truly unique product the company you do business deals with may see you as a potential target for acquisition. Be sure you have the proper intellectual property documentation filed. This is a good thing for most business owners, however even at the earliest stages of a company with unique intellectual property you need to be aware of your exit strategies and how structuring a business deal leads you down different paths.
Path of Least Resistance
Going to market and acquiring customers is expensive. The purpose of a joint venture relationship is to leverage the capability of a business partner to bring new clients that are actively looking to buy a product or service. However, sometimes the path of least resistance for quickly closing new business is to integrate with a partner and allow them to sell their clients a solution that includes both you and your partner’s products and services with no difference seen by the customer.
By allowing a partner to OEM or white label your product it reduces the amount of training and education required for effective selling to new clients. Bundling a product into an existing offering allows a partner to increase their value to their customers and at the same time reward you for your innovation. These types of relationships also reduce the overhead that is required for even basic tasks like accounting and customer service. While there may be some duties required, if issues arise with the product or service these will generally be dealt with between the two companies independent of the customer.
Prepare for Growth
When doing an OEM deal with a product for a business partner that has the Rolodex of customers to quickly sell a product or service it’s important to anticipate and plan for the growth. However; it is critical for most small businesses to time the addition of new employees with the actual time they are needed to fill in. Temporary hires can always be found in a pinch through a temp agency depending on the tasks your business and the partnership will require. It’s crucial that you have a clear and open dialogue with the business partner and to start the roll out slow with a pilot program in order to give your business time to ramp up and keep up with demand.
The plan for your businesses growth if doing business with a larger Fortune 500 type company is essential to the success of the partnership. There will need to be funds available to service the demand if the business partnerships success increases faster than anticipated. Some revenue cycles for larger companies may be longer than a small business is capable of operating under without having the necessary cash for pay roll and new costs associated to the growth occurring with new clients.
Find partners that can integrate your company seamlessly and the chances for a successful partnership go up dramatically. The reduced costs involved with an OEM type relationship will increase the ROI on each relationship versus other deals that may have significant capital investments in marketing and customer support duties.
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.
Discover more Joint Venture Marketing Strategies join his free report on Joint Venture Marketing.