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.
Small business owners often have trouble getting started, especially when they are competing with established businesses. Building a wide, regular customer base is difficult and time-consuming, and can require a large investment of capital up front. A lot of this capital is often spent on advertising, which doesn't always work. Free or very low-cost advertising is another great incentive to enter into a joint venture.
To give you an idea of a very simple JV, let's take the story of Joy Smith.
Joy Smith is a designer of handbags. Her creations are beautiful and colorful, and she is very proud of what she does. When she decides that designing purses is her true calling, she leaves her career to open her own small 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 persistent and refuses to give up on her dream. She knows she should advertise; however, money is short and she can't really afford to do that. So, Joy spends some time thinking about who her business contacts are, how they can help her, and what she can offer them in return.
Since she first started making handbags, Joy has always bought her supplies from a local craft supply and fabric store. She's recognized there and has built a good relationship with the owner of the business. She decides to approach the owner about entering into a joint venture.
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.
Truth be told, that is a very simple example of a potential joint venture. Still, even the smallest business deals can aid both parties in growing their business and profits. Joy lucked out by choosing to do business with someone she knew fairly well and already had a relationship with.
In real life, it can be difficult to convince an established business to enter into a joint venture, especially if you are new to the area. There is a lot of trust involved, and both parties have to hold up their end of the agreement.
Before you make a final agreement on a JV, it's vital to spend time with your potential partner. The two of you will discuss your needs and desires and what you can realistically expect from the agreement. It is absolutely necessary to create a detailed, clear and concise business plan that lays out every detail of the partnership.
It's also important to remember that you can shop around for different partners before creating a joint venture. There are likely many different joint opportunities that could aid your business in many different ways. There's no need to jump on the first thing that comes along. You can create a shell JV before you even approach a potential partner, so that you have something to bring to the table when you talk to someone.
Joint ventures are successful when they are entered into thoughtfully and carefully by all parties. If you think creatively and take time to carefully consider your options before entering into any deals, your joint venture might be just the thing you needed to make you that first million.
The writer of this article, Justin Bryce, is an expert with Joint Ventures. To learn about Joint Venture Benefits visit Justin at:
http://www.lazy-internet-marketing.com
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