A joint venture is a business enterprise undertaken by two or more persons or organizations to share the resources, expenses and profits of a particular business project. As we have previously mentioned, a joint venture can be formal or informal. In the case of most small businesses, informal agreements are the most common.
How to incorporate joint ventures into your business plan What are some practical ways to use the concept of joint venturing to your benefit and the benefit of the company with which you are joint venturing? Initially, examine any area of your business that you would like to keep costs to a minimum, yet receive maximum return on investment. (We know - that's every area.) Seriously, one of the major areas we hear complaints about the cost and return ratio is advertising. Have you considered a joint venture agreement with another company to share the cost of advertising? You can do this in several different ways.
Split the cost of an advertisement right down the middle. For instance, a coffee shop and a hair salon located in the same building might decide to do a customer appreciation day on the same day to help drive additional traffic to both locations. In that instance, they could save money by splitting the cost of advertising, since they are both trying to accomplish the same objective. They both receive the benefit of increased traffic and a lower cost for the ad, even though they have businesses that are not in the same industry.
Co-op ad dollars with your suppliers. One example of cooperative advertising is a small heating and air conditioning company that runs ads that list a particular brand of equipment. The supplier of that brand pays for 80% of the advertising because they know he is promoting and servicing their product. He kicks in the other 20% and has the exposure he needs in his community without all the out of pocket expense. It's a winning combination because both companies benefit.
Understand that it may take a while for you to build a relationship with your suppliers before they are willing to look at joint venturing with you, but taking the time to prove yourself is well worth the effort. A coffee shop owner was approached by her coffee bean supplier when they noticed that she had generated over $16,000 in whole bean sales in the previous year, without any formal advertising. The coffee bean supplier recognized a valuable asset and came to her to ask what they could do to help her become even more successful at selling their product. She now has access to additional advertising dollars and in store displays at no cost to her as the result of proving herself to her supplier. Another example of creative joint venturing is a small gas station that joint ventured with a small car dealer. The car dealer placed vehicles for sale on the gas stations high traffic lot, and the gas station owner got exposure to the dealer's customers for the mechanical services he had just begun offering through his station.
The arrangement had no out of pocket expense for either business, but both of the owners report benefiting from the agreement. There are many ways to creatively leverage the concept of joint venturing in business. Think win-win and create a scenario that works for you. Copyright (c) 2008 Christian Fea.
Christian Fea is a Collaboration Marketing Strategist. He empowers business owners to discover how to implement Integration, Alliance, and Joint Ventures marketing tactics to solve their specific business challenges. He demonstrates how you can create your own Collaboration Marketing Strategy to increase your new sales, conversation rates, and repeat business. He can be reached at: http://www.christianfea.com