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.
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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
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