First it’s thought that big players are the only businesses that do JVs and they don’t want to deal with a small fry. Second is the notion that small businesses are boxed out from being in the JV picture at all because they have nothing to offer. Another misconception is that the entrepreneur thinks they are not in a business conducive to doing JVs at all.
Without fully understanding what a JV is or could be, it’s easy to see where this train of thought may come from.
Let’s start with the first misconception and define a JV better. Although it certainly could be, a JV is not necessarily two bug companies leveraging off of each other or a medium sized business catapulting off of a huge business. As a matter of fact, many small business see tremendous growth due to a JV with any size other company. It’s not greatly publicized but that’s how most medium and big businesses actually “made their bones” in a relatively short time period.
Joint ventures come in all shapes and sizes but only one part of this widely misunderstood marketing medium is true. The true part is that it’s all about leverage. The real misnomer is in a small business thinking they have nothing to offer another party of any size. Yes, the odds of a $100k business being able to make a worthwhile contribution to a $100 million business is slim, but it could be possible. For our purposes here we want to aim a little lower, but not quite as low as you may be thinking.
The key to a JV with a business the same size as yours or one 10x bigger is thinking more in terms of two ways. First, the other party must be a non-competing entity but have the same target audience. Second you need to think in terms of “what would they want from me to let me borrow that list and endorsement”. If you can’t reciprocate by giving them an opportunity to use a similar sized list of targets, then high value information/education or money is usually the great equalizer.
What you are really trying to do is gain potential clients that fit your target audience without spending marketing and sales dollars to find them. That’s why you want the JV partner to do the introduction and endorsement for you and not just “rent” the list from them. That defeats the purpose of the whole exercise.
So the result of this is that you either get yourself in front of potential clients that you already know spend money and can use your services/products or actual instant clients without the dancing, courting, and waiting. For a service, door #1 is more likely and the best plan.
In return, the JV partner either gets a well educated audience out of what you gave their list or gets some kind of return on the gross revenue that you make for their part down the road. Depending on what you are selling, this could be a one time commission or recurring fees for a set period of time such as a year for each purchase made by each client you gained from their help. Just so you’re not hit between the eyes when negotiating a fee, you need to do your numbers to know just how much you can give up especially if you also included some kind of discount to the list to make the JV partner look good.
To not waste the effort or the possible slight loss you may have taken to acquire these new clients, you had better have your client management process lined up so you can turn them into long term clients. I’ve seen businesses triple their client list (and profits) with one carefully played out JV. Of course the rest of the business was also set up to handle this influx as well.
So let’s quickly go over the thought that you may not be in a business that can do joint ventures. The truth is, as long as another non-competing business/industry exists that has the same target audience as your business, there is a JV opportunity. All you need to do is open you eyes to the possibilities.
Before I tell you what I want you to do now, I want to make something clear. Although a JV can lead to some sort of true partnership, the nature of a JV is just sharing resources with a simple “you do that for me and I’ll give you this in return”. A true partnership is a much more complicated entity than a JV. But doing a few with the same company is a good litmus test on what a partnership with them may be like.
So here’s what I want you to do. Grab a piece of paper and list out what products and services you would like to form a JV around. Then list out what kind of break even margins or small loss you can deal with giving out as a payment. If you can barter with something else other than commission based payments such as providing their audience with superior information/education or reciprocating an endorsed offer to your list for them, write that down as well.
Next list out the specific target audience(s) for each JV item then find non-competing potential partners that serve the same target to contact. Keep in mind that sometimes a good JV partner is an independent sales person and not necessarily a business entity.
Remember, getting buy-in from a JV partner is the same as selling to a potential client. It’s all about spelling out what’s in it for them. In turn, you might just find someone to work with that adds a new passive revenue stream to your business as well.
If you would like to discuss these topics for your particular business, just follow this link to set up a free 30 minute session http://consultantscoach.com/FreeStrategySession.php.
To Your Business Success-
George Sierchio
The Consultant’s Coach
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