joint venture marketing
Because joint ventures involve more than one business at a time, it pays to learn how to play nicely with others before embarking on your first JV partnership. The negotiation fun begins when you find a prospective partner to draw into your proposal and ends when you draw up a solid contract with the business. We have negotiation tips that will help the process flow as smoothly as possible.
This step is important, whether you are approaching a prospective partner for the very first time or working out a contract that benefits both parties. From the very beginning, it is important to do your homework about prospective JV partners, ranging from the products they sell to the types of clientele with whom they typically work. Learn a bit about their bottom line as well, including their possible profit margins, unique challenges and available resources. Knowing your JV partner well will benefit you in wooing new partners, as well as drawing up a contract that is mutually beneficial.
In addition to learning everything you can about your prospective partner, it’s important to be prepared to offer the key information about your own business clearly and concisely. Determine how your partner might benefit from working with your business and outline those benefits precisely in your original proposal. List the needs your business has and the way a joint venture will meet those needs so you can maintain consistent priorities throughout the negotiation process.
Benefits vs. Risks
When embarking on a joint venture, write down a list of all the benefits each partner stands to gain, as well as any risks that might be undertaken. Risks should be reduced to a minimum throughout the negotiation process, so that both parties are comfortable with the arrangement. Leveraging current resources, rather than creating new ones can do this. Put benefits into writing, so each JV partner has clear expectations and possible recourse if expectations are not met.
Writing a Contract
All good negotiations begin and end with a comprehensive contract that protects the interests of all partners. The contract should include the overall purpose of the joint venture, the benefits the partners stand to gain and a solid timeline. If you are unsure how long to continue your joint venture, set a specific date to review the partnership and assess its success. Include concrete criteria to fully evaluate the partnership, as well as a fallback option if the arrangement is not going as planned.
Beyond these basic steps, effective negotiation is characterized by honesty and transparency between both JV partners. Remember that most joint ventures continue on for some time, so start yours out on the right foot with negotiations that are truthful, open and professional. Keep the process going with regular contact with your JV partner to assess your current arrangement and make adjustments as necessary in your plan. An effective joint venture offers many potential benefits, including a broader customer base and higher profit margins for everyone involved.
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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