Joint Ventures Offer Benefits When You Know Where To Look
If you have read anything about opening a business or growing the business you already have, it’s likely you’ve seen the term joint venture, or JV. A joint venture is a way for you to partner with another business for a specific reason or reasons. You might find you can bolster each others’ strong points or share each others’ markets. When two businesses create a joint venture, they are actually creating an entirely new business entity.
The term joint venture does not in fact refer to this new entity but to the reason for the partnership. Also, there are no legal limits on who can enter into a JV — anyone can, including individuals, corporations, websites and small local businesses.
The most common type of joint venture is between two large companies. They enter into them most often to break into a new or specific market. There are countries that demand any foreign interest entering their economy first enter into a JV with a native company. Still, even if it’s not a prerequisite, foreign companies can greatly benefit from having an interested party located in-country. The local office can keep a better eye on the social, economic and political situations there.
Even where it’s not required, joint ventures offer fantastic benefits when they’re not taken too lightly. One reason many small businesses enter into joint ventures is to take advantage of the products, skill sets or customer base of another company.
Let’s take an example: You run a computer sales store but don’t offer computer repair services. Your customers continue to ask about these services, and you repeatedly turn them away, recommending the guy who owns the little repair shop down the street. You realize that you could both benefit by creating a business partnership, and he agrees to your joint venture idea. You both benefit. You no longer turn customers away, and he gets all the business plus a cut of the profits.
Although joint ventures offer a great many benefits to all parties involved, they can be disastrous if they’re taken too lightly. Small businesses that are able to successfully enter into joint ventures generally possess five common characteristics: 1) Creativity; 2) Persistence; 3) Visualization skills; 4) Negotiation skills; 5) Client relationship skills.
Creativity is a key skill in successfully seeking out and developing joint ventures. You must be able to see all the ways that your business could fit into various joint ventures. There are joint venture possibilities for virtually anyone and any kind of business if you know where — and how — to look. Creativity is also important when you’re explaining the benefits of a joint venture to a potential business partner.
Persistence is particularly important when you first approach your potential partners. Small businesses have a lot going on, and the owners can forget you if you’re not careful. You might also have to explain what a joint venture is if they don’t already know.
You must have good visualization skills because you have to be able to predict how your side of the JV will benefit your partner, and how the two sides will fit together. Think of it as a jigsaw puzzle. If you’re forcing the pieces together, you need to find a better fit. No breaking out the saw, now.
Negotiation skills are absolutely necessary if your JV has any chance of success. You will have to spend many hours with your new partner making sure you are both going to get what you want out of the deal, and that it’s a fair amount of work for both of you. Sometimes, that will mean being assertive. Being too passive might mean you end up doing all the work and only getting half of what you wanted out of the deal.
Finally, once your joint venture is under way, you’re going to have to spend some time nurturing your client relationships. This is especially true if you’re the partner bringing in the clients. Your existing clients may not understand the joint venture and may fear that their level of service will change. To ensure your client relationships stay strong, you’ll need to stay in contact with your customers and work at understanding their needs. This way, you’ll not only retain your customers, but you’ll also know which offers, products and services they’ll respond to.
Joint ventures can be exceptional business opportunities when they’re entered into properly. Just be sure you do your homework and understand exactly what your responsibilities in the venture will be and be clear about what you expect from your partner.
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