Are you frustrated by lack of time, money, and resources to make your business grow? Almost every company goes through a period where growth is stifled due to various constraints.
Don’t despair. There are options available for the creative, enterprising entrepreneur and one of the best is an increased reliance on joint venture partners.
Joint Ventures
For many small business owners, the only way to finance growth is by taking on partners. Not direct partners, but joint venture partners who take over the costs of a particular aspect of your business in return for something of value – money or otherwise.
This concept can be used for a variety of business needs – anywhere from funding creation of new products to partnering on a new advertising campaign.
Finding Joint Venture Partners
The best joint venture partners are those who are closely aligned in some way with your industry, but are not direct competitors. Do some research to find joint venture partners that are naturally complementary.
For instance, if you sell fishing equipment on your website, look for a business that offers cabin rentals on the lake or the manufacturer of materials used to make flies. The former would be a great JV partner for advertising; the latter could be a great help in creating a new tackle box that exclusively features products made from their materials.
Achieving The Buy-In
Now comes the hard part – contracting for an exchange of services or money that benefits both parties. This can be tricky depending on how much each partner contributes to the end result. Get creative when thinking of an appropriate payback schedule.
Let’s go back to our example of the fishing equipment company. You start marketing by way of online advertising, which is funded equally by each partner. Perhaps the best way to convince the cabin rental company to opt-in to this opportunity is to develop a package that includes a weekend stay along with a basic tackle box and fishing lessons all for one low price. You sell the equipment to the cabin rental at a discount and they take all the profits. Or, you could have the partner company pay you the retail price for each package sold while they keep your product on a consignment basis.
What about the creation of a new product? Keeping with the same example, the manufacturing company could absorb the cost of research and development for the tackle box and its contents. In return, they would receive a percentage of sales and a prominent mention of their name in all advertising and promotional materials.
And, if you are just starting out but have an amazing information product to sell, it might be worth it to take the product to someone with a large subscriber list and high conversion rates. Your overhead is low and so the profit alone could be worth sharing the revenue with your JV partner due to the marketing reach he or she has.
The idea is to make the joint venture a win-win situation for both parties. Find out what is most important for your partner and see if you can provide that return on their investment. And, if you can strike a deal where no money changes hands, it helps your company’s growth efforts immensely while preventing the financing of capital outlay.
Finding the right joint venture partners can be a great way to create a new product or start an advertising campaign that is out of your budget as the single buyer. Don’t be afraid to ask for a partnership. Remember that the association provides a potential benefit to all.
See you at the top of Google!
Sean Rasmussen
SEO Australia Pacific
AussieSEO.com © 2007 - 2010
Excellent idea, this joint venture concept. What could be a more obvious solution? As you say, the negotiation will be interesting, but the outcome will then function as a win-win situation, which can only be good.
.-= Jo Carey-Bradshaw´s last blog ..Empowering Mindset – Mindfulness =-.
If you have a great product or idea and little start up capital, a joint venture could be well worth looking into Jo.
Joint ventures are a great idea. After all who has a heap of funds when they are just starting out?
Have you done this Sean? How has it worked out?
You would have to do your due diligence on them to make sure they are worthy of your trust
.-= Gee´s last blog ..Choosing Keywords and Understanding Their Importance =-.
Yes, I have been involved in joint ventures Gee. For the most part, they have gone very well and I have no regrets.
Wow – interesting idea. I don’t feel that I am already at that stage, but it’s good to know what else is possible and what you could approach people with.
Thanks for broadening my horizon (again)
.-= Renee´s last blog ..Definition Of Motivation =-.
No problem Renee, there are lots of different ways to go about things to achieve success.
Great idea. Your business is not an island. It’s one piece in the puzzle that your customer is looking for. It makes sense to form relationships with other complementary businesses. You do your customer a big favour by vetting them first and you get rewarded by referrals from the other business.
.-= David Moloney´s last blog ..Positioning: The Brand Personality For Your Small Business =-.
Hi Sean,
I think I’m a fair way off from making deals like that with joint venture partners. I’m still at the exchanging links on your blogroll, or will you submit this for me to a social bookmarking site, or do you want to exchange banner ads, etc stage. Baby steps.
Still, it’s fascinating to see how you can orchestrate a deal with joint venture partners.
.-= Jazz Salinger´s last blog ..Learn and Earn – It’s a Marathon Not a Sprint =-.
Like any business offline, I would be very careful who I chose to do a joint venture with.
I have been involved in a few businesses in my life and I have also heard some awful stories of partnerships going horribly wrong.
Joint venture partnerships need to be really thought out and all the legal contracts need to be in place before going forward.
As you said joint ventures are a great opportunity to expand your business online and offline. You really have to have a very solid business plan though so you both know where you stand and what you are going to bring to the business and take out. I have been involved in joint ventures with family and it became very messy because we had no set rules at the beginning.
.-= Jackie Stenhouse´s last blog ..Anxiety Separation in Children =-.
Setting up the rules before you go into a joint venture is really important. And the closer you are personally to your joint venture partners I think the more important it becomes.
Otherwise it will always get messy, as it’s hard to separate personal and business issues once there is trouble.
.-= Renee´s last blog ..Improving Self Confidence =-.