Great New Discovery Helps You Become An Expert With Joint Ventures
Have you ever thought about creating a joint venture? There are many reasons people do. Some of them want to build on their company's strengths by entering into a mutually beneficial partnership. Others want to pool financial resources, use new technologies or try out a new management procedure. The main reason to enter into a joint venture is to increase capital and expand your business.
The hardest thing for small businesses is often to become established within a community. Old businesses already have firm and wide customer bases, and building a good set of regular customers is time-consuming. Many new entrepreneurs also worry about spending too much on advertising, and this can be another great advantage of creating a joint venture.
Let's look at an example of a small business taking advantage of a joint venture.
Joy Smith designs and makes beautiful, colorful handbags. She loves what she does and has sold a few to family and friends. She decides that designer handbags are her true calling, so she quits her job to open a small handbag boutique.
Joy has a great big grand opening with colorful posters and banners in front of her new store, and over the first few weeks she makes good sales. When the newness wears off and the banners are put away, however, Joy's sales start to slump.
Joy is determined not to give up. She considers advertising in her local paper, but she's not sure she can afford to buy a full- or even half-page ad. And why bother if she's going to have an ad the size of her thumb in Section D? Suddenly, Joy is struck with what she thinks is a very original idea. She is considering asking her supplier to make a deal that would benefit them both. What she's thinking of is a joint venture.
Joy contacts the woman who owns the store where she gets her supplies. She's been a regular customer there and makes large orders at least once a month. She's hopeful that the owner will like her idea.
Joy proposes that she set up a display of her purses inside the shop. The owner of the supply store would receive a percentage of any sales made inside her store.
Both parties benefit. Joy gets some free advertising, increases her customer base, and sells some bags. The supply store also gets some advertising for its products used in making the handbags, offers its customers a product, and receives a percentage of the sales from handbags sold there. In addition, they keep Joy as a loyal customer who continues to buy all her supplies there.
Truthfully, that's a pretty simple example of a joint venture. However, it goes to show that even the simplest ventures can really help both partners to grow their businesses. Joy was lucky because her potential partner was easily identifiable and someone she knew fairly well.
In a real-life scenario, it can be much more difficult to convince another business that entering into your joint venture is a good idea. There is a necessary amount of trust involved, and each business has to be convinced that the other will uphold their end of the deal.
When entering into a new joint venture, be sure to spend a great deal of time talking to your partner about what both of you want out of the agreement. Develop a strong, clear business plan that carefully spells out the responsibilities of all involved and how the JV will work.
Remember also that you don't have to leap for the first joint venture that comes your way. Consider all the ways a joint venture could help your business succeed, then make a list of potential contacts and partners that might be interested and what you would give them in return. Then, before you contact anyone, develop a plan that you can present to potential partners.
When you take the time to think creatively about how JVs can help your business succeed, determine who your best partners could be, and take the time to carefully plan the venture, your business can grow by leaps and bounds.
