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.
The hardest thing for small businesses is often to become established within a community. Old businesses already have firm and wide customer bases, and building a good set of regular customers is time-consuming. Many new entrepreneurs also worry about spending too much on advertising, and this can be another great advantage of creating a joint venture.
Let's look at an example of a small business taking advantage of a joint venture.
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.
Joy contacts the woman who runs her supply store. She has a boutique in town that sells fabrics and decorations for projects like Joy's. She knows Joy as a valued customer, so Joy decides to approach her about a possible joint venture.
Joy proposes that she be allowed to set up a display in a prominent area of the supply store to show off her wares and direct people to her shop for more. The display will indicate that the supplies used to make the handbags were all bought at the supply store. For any handbags sold off the display, the supply store will receive a percentage of the sale.
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.
Truthfully, that's a pretty simple example of a joint venture. However, it goes to show that even the simplest ventures can really help both partners to grow their businesses. Joy was lucky because her potential partner was easily identifiable and someone she knew fairly well.
In a real-life scenario, it can be much more difficult to convince another business that entering into your joint venture is a good idea. There is a necessary amount of trust involved, and each business has to be convinced that the other will uphold their end of the deal.
When entering into a new joint venture, be sure to spend a great deal of time talking to your partner about what both of you want out of the agreement. Develop a strong, clear business plan that carefully spells out the responsibilities of all involved and how the JV will work.
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.
When you take the time to think creatively about how JVs can help your business succeed, determine who your best partners could be, and take the time to carefully plan the venture, your business can grow by leaps and bounds.
Article Source: http://www.artsymmetry.com
Justin Bryce has been a contributing author for this website
and is an acknowledged expert in the field of Joint Ventures.
He can be found on the Internet at this website:
www.lazy-internet-marketing.com
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