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Set Up a Joint Venture so that Everyone Wins
Shobha Narwal
Setting up a Joint Venture is relatively easy - but there are some key elements that will either "make" or "break" your partnership.
The most important aspect of setting up your joint venture - in every case - will be the quality of your research before you start "setting up" anything...
The reason why most JV's fall flat on their face is because they were destined for failure before they even started - there was no possible way that it could've worked out, due to hundreds of reasons - but all of them resulting from poor research before the deal was set up altogether.
That said, and assuming you've done your due diligence already, let's focus on how to set up the Joint Venture so that everyone wins - and so that you're protected if the deal goes "south"...
I'm not going to get into the different types of Joint Ventures, as there's literally hundreds of different ways to create a partnership with another business.
Instead, let's take a look at what things will determine the success of any joint venture, big, small or complex:
1. Be VERY Generous with the Up-Front Profits...
Remember that the real benefit to joining forces with another company (especially with endorsements, etc.) is that you will acquire their customers - many of which will buy from you again and again.
This is what's known as "backend profits".
In other words, the JV itself is more or less a "means to an end", so to speak.
So to make sure that your partner stays motivated, give them the majority of the profits up-front. This will make them a willing partner, and they'll be happy to see you succeed in the long term.
Speaking of which...
2. Go for the Long-Term Profits Whenever Possible...
Whenever possible, try to arrange for a long-term partnership instead of just a "one-shot-deal". For example, if you're arranging an endorsement, why not also arrange mutual upselling, co-marketing efforts and product integration strategies?
In other words, you should be thinking about how to create consistent income indefinitely for both you and your partner.
In doing this, you will create a solid income stream - as well as creating a much more concrete business relationship.
Note: Long-term arrangements will indirectly add a higher degree of seriousness to the deal in general, which will only result in better performance for and from everyone involved.
3. Use Proven Marketing Material...
Never use unproven sales copy, ad copy or any other type of marketing material when carrying out the "action" stage of the partnership.
Test and optimize every single marketing method that you plan on using to make sure that it will in fact generate sales for you and your JV partner.
You can quite easily run "mini-tests" or "sample campaigns" to test the effectiveness of your marketing materials. I would suggest using classified ads, pay-per-click search engine text ads or similar low-cost advertising options so that you can quickly and effectively test, track and optimize your marketing copy.
Additionally, I would highly recommend hiring an experienced copywriter (a marketer that is skilled in creating sales-pulling letters, ads and endorsements). Look for a copywriter that has a number of successful deals under his belt.
Note: One of the best ways to find a good copywriter is to approach people that you know are selling alot of products using a "direct marketing" approach; ask them who they used to write their copy.
3. Get Serious...
Joint ventures are serious business. Respond quickly to your partner. Follow up on the things that you say you're going to do (don't just "say" stuff - do it!).
Treat your partner with respect, and be brutally honest at ALL times - even if it hurts. This will quickly lay a foundation of truthfulness, trust and integrity on both ends (if you've chosen a good partner).
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Article submitted Thursday, July 17, 2008
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