Starting a Joint Venture

October 24, 2011

Unfortunately, many people in business think joint ventures are only for the big companies. McDonald’s can do those movie tie-ins with the big Hollywood studios, for example, because they have enough customers and marketing power to make most companies eager to work with them. But what if you’re a small business? How can you get anyone to want to do a joint venture with you?

Well, it’s actually easier than you might think. You just have to know a little bit about picking the right partner and valuing what you have to offer. If done correctly, a joint venture can be a huge success for both parties.

Who to Choose?

Obviously, you won’t be able to do a joint venture with a large corporation. Instead, you need to pick a company that is close in size to your own. If you choose one that is too big, they will probably demand more than you want to offer for the deal. If you choose one that is too small, the benefits received from the arrangement might favor your partner and not you.

Also, look for businesses that are not franchises and are not part of national chains. You really want to do a joint venture with a locally owned and operated company. The main reason is the decision maker is likely to be accessible. Plus, they have power over their business so they can make the final decision without having to contact the home office for approval.

Avoiding your competitors is a good idea, too. Competitors aren’t just those companies selling the same product either. You also don’t want to do a joint venture with anyone offering an alternative to your product. For example, if you sell vacuums don’t partner with a maid service.

Finally, consider the reputation of your prospective joint venture partners. When you make a deal like this, you are essentially going to be sharing customers. If they have a bad reputation, you could be hurting your relationship with your current customers through the association. You never want to do any kind of deal that might damage your reputation so choose wisely.

What to Offer?

Think about what you could offer to a potential partner that would be valuable to them. For example, if you have a lengthy mailing list of customers that could be of interest to a potential partner. You might also be able to offer something to the clients or customers of your partner, such as coupons, discounts, or offers that have a high perceived value. In fact, you could simply offer to work together to host a contest.

Here’s one example. Let’s say you operate a movie rental business. You could partner with a large employer in your area to provide free rental coupons that could be used as paycheck stuffers for their employees. You would generate more business, but they could increase the morale of their workers without having to spend any money.

Another example might be that you provide copywriting services. You could partner with a graphic designer in your area so you could both offer additional services to your clients, such as complete website creation.

You simply need to decide what you have to offer and which companies would be most likely to find value in that. And don’t be discouraged if you get rejected a few times. Just go back to the drawing board, tweak your presentation, and find a new potential partner.

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