joint venture marketing
There is no doubt that a joint venture is an effective marketing tool that can broaden your customer base for a very affordable upfront investment. Joint ventures allow two or more companies to benefit from one another, in terms of customers, sales and profits.
Despite the broad appeal of JV partnerships, many business owners are still unsure of what a basic joint venture partnership looks like. Learn about the basic elements of a JV partnership so you can begin a joint venture of your own.
A joint venture begins with two or more companies that offer related, but different, products or services. It is important to find a company that caters to a similar market base with a related product, so you can build your customer list together without competing with one another. Consider the industry you are in, and then find other businesses within the industry that offer a menu of completely different services from your own. That is the ideal JV partner with whom to begin.
A Contractual Agreement
Once you have a JV partner to work with, it is important to draw up a contractual agreement that will bind both companies to the terms and conditions of the partnership. There are many good templates you can find online to assist you with the creation of your contract. Make sure the terms are clearly stated, including the duration of time that the partnership will remain in existence. Both parties should sign the agreement and keep a copy for their own records.
A Common Goal
JV partners share a common goal for their partnership, which usually involves reaching a larger number of customers with the intention of boosting sales. When all parties mutually agree upon the purpose of the partnership, there will be a greater chance for success. The goals of the partnership should be relatively narrow, and each party should have a thorough understanding of how their individual actions and intentions contribute to the goal of the partnership.
Shared Profits and Management
In most cases, a joint venture will involve shared profits and control over the partnership. To reach this end, it is important to have accounting practices in place that will account for the specific profits achieved through the joint venture. The contract should also state the responsibilities in managing the partnership, which are typically shared equally among the involved parties. With a common goal in mind, it is much easier to track the success of the partnership through the shared profits and losses.
A joint venture can have a variety of features, based on what the partners want to achieve. However, most JV’s will share these common elements if they are to be fair and successful for all businesses involved. It’s important to educate yourself about the ins and outs prior to searching out potential partners, so that your ultimate agreement is successful for all parties.
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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