How do you want your joint venture to succeed?
Small business owners are in a constant improvement mode. One must improve the business to earn more profits, reduce expenses and beat the competition, or face the fate of more than half of all small businesses: failure and closed doors. One way business owners step up their improvement strategy is by forming a joint venture.
A JV is a powerful partnership in which the strengths, knowledge, experience and resources of two companies combine forces for a specific business purpose. If you are interested in forming a JV, or have already formed a JV, what is the reason for your success? Here are some more popular considerations for forming a JV:
generate profit
Of course, one of the main goals of any business is to make a profit. A JV is no exception. The combined forces of the JV partners work together to make more sales through strategic marketing of products or services, and make more profit than they would have made on their own.
Increased profits could be translated into other strategies of a JV, such as cutting expenses. When JV partners contribute to expenses like marketing or research, their share of the workload is reduced, leading to higher earning potential.
Find new market channels
A JV strategy cannot necessarily generate profits. Some business owners may be looking for bigger and better market channels. A strategic JV could be one where business owners simply share mailing lists, carry a free ad for the other business, or even share distributor information.
New distribution and market channels can help a single business owner expand their own business and find profit in the future. Don’t ignore the business growth potential of acquiring more customers through a joint venture.
develop new technology
A JV may exist to conduct research and development of a new product or service. Two smart business owners who have proprietary technology could combine resources to form a better product for consumers. One giant example is Sony Ericsson, a JV formed by Japan’s electronics leader Sony and Swedish telecommunications expert Ericsson. They joined forces to share technology and marketing resources. They are one of the world’s leading innovative mobile phone manufacturers.
Diversify the business
A JV could simply be a means of diversifying products or services for a business owner. For example, a printing company may join forces with a freelance graphic designer to offer not only printing services, but also design consultation on business logos, brochures, catalogues, etc. Never overlook the power of offering more to your customers.
A small business needs sharp strategies to beat the statistics. A third of new small businesses will close within two years. A little more than half will fail in four years. It is not enough to simply hang a tile and hold on to the hope that “if I open, they will come.” Keep your trading strategies in the works. And consider a JV to help out not only for the sake of profit, but also for your own ultimate business success.