|
Overview:
Setting up a Joint Venture
is relatively easy - but there are some key elements
that will either "make" or "break" your
partnership.
Read
on...
--------------------------------------------------------------------------------------------------
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.
In fact,
before you read further, I'd recommend that you download and
read the "19
Crucial Factors to Consider Before You "Sign the Dotted
Line" (PDF Download)"
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"...
How
to Set up the Deal so That Everyone Wins...
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).
Communicate
often. Don't just "set and forget" the deal. Follow
up regularly, and show an active interest in how your partner
is doing.
In fact,
negligence of this rule is likely THE biggest reason
that JV's fall apart or simply dissolve.
How
to Protect Yourself in the Process...
Before
I go any further, your partner's protection is just as
valid as yours. Make sure that they're adequately protected
and "looked after" as well.
1.
Everyone Should Sign a Non-Disclosure Agreement...
All
parties involved will undoubtedly be sharing a lot of
sensitive and "trade secret" information throughout
the course of the partnership, and this is only good business
practice in general.
Now,
that said, it's very important that you don't "jump the
gun" on this one. Make sure the partnership is already
"rolling" before you suggest signin a NDA. Reason
being, nothing will kill a deal faster than a bunch of intimidating
legal forms, agreements and stipulations - and attorneys.
So
be cautious, yes, but also be "tactful".
2.
Write up a Specifc and DETAILED JV Agreement...
This
is a very extensive topic, and is better left to the "pros".
However, I will say that at the very least, your agreement should
cover the following key points:
*
How long will the partnership last? Indefinitely?
*
What will invoke a termination?
*
How and when will payment take place?
*
What are the allowances in terms of PR in regards to your partnership?
*
Who is responsible for what? (BE SPECIFIC, DETAILS DO
MATTER!)
*
How will you handle refunds, chargebacks and losses?
*
What will happen when the partnership ends?
Now,
this is obviously NOT the "ultimate agreement checklist"
by any means. You need professional advice to ensure the legitimacy
and protective qualities of your JV agreement.
And
of course, we always recommend that you consult a licensed
attorney in regards to drafting a legal agreement of any kind.
Note:
You can actually download JV agreement templates that you
can use as a guide from JV-Web. Go to JV
Agreements >>
3.
Trust Your "Gut Feelings"...
If
you feel like something's awry, confront your partner about
it right away. Nevermind if you offend them, it will be the
least of your worries, and if they're trustworthy, they'll understand
your concern anyway.
If
you sense that something just isn't right - then you're probably
right.
Follow
your instincts... but don't be a compulsive skeptic. And don't
be afraid to take intelligent, calculated risks.
-
Chris
Rempel, JV-Web.com
|
