To form a joint venture or not to form a joint venture: that is the question. Joint ventures are a strategic alliance and partnership between you and another entrepreneur for a specific business purpose. Profit is generally the biggest motivation for forming a JV, but there are other reasons - which is why you should ask yourself some important questions before you begin. Here is a small sample of questions you should ask yourself:
What do I sell?
Are you a service or a product-oriented business? What you sell can play a large role in choosing a JV partner. Product-oriented businesses are more likely to pair up into JVs since there are numerous ways of combining contrasting and similar merchandise, such as package deals, coupons, free samples, or even a new joint venture product. These have been proven ways to a successful JV relationship when two types of products are sold jointly. Respective customer bases are introduced to another product and receive more benefit with package deals and reduced prices.
Of course, this is not to say that service businesses can't benefit from a JV. In fact, services can certainly combine forces. Consider a neighborhood hair salon owner giving their customers a great deal on organic hair products produced by another local entrepreneur. Sit down and get creative. Think about how your product or service could combine synergistically with other types of businesses.
How do I reach my target market?
Who is your target market? You should know. Any business that will survive needs to know their demographic customer base. A JV can help you get more products into the hands of your target customers.
Consider a skateboard company who sells boards, accessories, and apparel. How can this business owner expand? Perhaps a strategic alliance and JV with a local chain of surf stores is the answer, as the demographic is similar. Consider how you can reach more of your target market with a strategic JV.
How am I working against my competitors?
Who are your competitors? Is your slice of the market share growing? Are you at a plateau, or even shrinking, while your competitors continue to edge you out of the pie chart?
Joint ventures will open markets, generating new customers and even reaching your competitor's customers. Consider if a JV can give your business more clout and more credibility. With access to a larger market base and an improved reputation, your business can soar above the competition.
Take for instance a local fish and tackle store. An alliance and JV with a national brand, such as the American Sportfishing Association or the American Fly Fishing Trade Association, could add tremendous clout that would attract bigger customers and take back your desired market share.
The key thing to remember is that your JV is a strategic alliance with another business. Don't go headlong into a JV without a purpose and a goal. The more questions you ask yourself, the more prepared you will be to move forward into a JV.
Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.
To discover more Joint Venture Marketing Strategies join his free Joint Venture Marketing Wealth Report.