A guide to joint ventures for entrepreneurs

Joint ventures (JVs) are projects where two or more people/businesses collaborate to make them successful.

They can really be anything — from co-authoring an ebook or co-hosting a seminar to starting a new website or business to collaborating on the development of an idea into a product… the list is endless, and only limited by your creativity.

Joint ventures are a great way to build new businesses or extend current brands and an easy way to fill in gaps that might exist with one entrepreneur’s skillset.

SHOULD YOU DO A JOINT VENTURE?

There was a time when I resisted doing joint ventures. I like running my own business and being my own boss and all that. But when I got to a point in my business where I had achieved the things I wanted to achieve and I was looking for the next mountain to climb, I realized I couldn’t do it on my own. I needed to work with other people.

Although I still run my own business on my own, I like joint ventures for a few reasons:

  • I subscribe the theory that 1+1=3. Two (or more) people who collaborate on a vision can actually turn a good idea into an amazing deliverable.
  • Joint venture partners have skin in the game and therefore they are more motivated to succeed than if one entrepreneur hired employees to do the work.
  • Joint venture partners give each other a good perspective and great networking opportunities.
  • Joint ventures are good for primary businesses or supporting/complementary brands.
  • Joint ventures take less time to achieve success, helping you to get a business up-and-running-and-profitable sooner.

(I’m sure there are other reasons for liking joint ventures but these are the things that attract me to them).

Since joint ventures can be an added aspect of your existing business (such as co-authoring a book), you can build your existing business with a joint venture; but joint ventures can also be a new and complementary brand or business, so you can grow revenue from a “non-primary” business to supplement your income.

If you are thinking about growing your business or income, consider a joint venture as a way to do it. You don’t have to JV your entire existing business by partnering 50/50 with what you’ve already built. Start small and JV on just one part of your business.

WHAT YOU NEED BEFORE YOU START A JV

Before you approach someone about doing a joint venture, you need to decide a few things:

  • Think about what you want to do a joint venture in. (An existing business? A new business? A brand? Some other project?)
  • Decide what you want in a joint venture partner. Ideally, they share your vision and work ethic but provide a different skill-set that allows you to work together to complete the project.
  • Decide what you hope to get out of the joint venture. Money is often one of the bigger motivators but it’s not the only one. Maybe you want to extend your brand or get more people using your software or something. Knowing this up-front will help you figure out what to do and who to do it with.
  • Figure out how much time, money, and effort you are willing to invest in the joint venture. This is huge. I’ve seen a lot of joint ventures collapse because one or both parties miscalculated the commitment required.

FINDING A JV PARTNER

In my opinion, the best joint venture partnerships are based on a pre-existing relationship. I’ve done JVs with people I didn’t know well and they still worked out (for the most part) but the most enriching and successful JVs were the result of a pre-existing relationship. I don’t mean that they were necessarily friends; but we knew each other — we met in a forum or via social media or they were a client.

Social media is a great way to find a JV partner. Twitter, LinkedIn, and a couple of forums I participate in have been the best tools for partnership discovery. Pick a couple of them, participate, and make your purposes known to others.

When you find a potential JV partner, float the idea past them about doing a joint venture. It might go nowhere but the two of you might click and excited collaborate.

STARTING UP THE JOINT VENTURE

As you work with your joint venture partner on start up your JV, here is a list of tips that I’d advise all joint venture partners to remember:

  • Keep an open mind. This is a JOINT venture. You might have the initial idea but the other person can bring valuable changes to the idea before the project starts.
  • Get creative. A JV doesn’t have to be one business partnering 50% with another business. Find some idea that you both work together on. Start small. Do several smaller JVs first before you take on anything too major.
  • Clearly outline the investment of time, money, and effort that each partner is committing to. Remember that there are often up-front AND ongoing costs associated with a joint venture and you should have a plan in place over what these are and when they are.
  • Understand how this project fits into each person’s business. If the JV is 100% of one person’s business and 10% of the other person’s business, the second JV partner might SEEM less interested or invested than the first one. This needs to be communicated and resolved before the project starts.
  • Plans are huge. Have a plan. For example, create a business plan for your business joint venture, and a marketing plan for your website joint venture, and a publishing timeline for your book or ebook joint venture. Plan in great detail.
  • Identify exit strategies. This is huge. Define success and failure and come up with exit strategies for each. Who will own what if the partnership collapses? What happens if one person moves on to other things? How are the rewards shared and when are they shared? What happens if the project becomes super-successful and more people (i.e. employees) need to be added to the mix?
  • Legal contracts are valuable but I confess that not all of my joint ventures have legal contracts. The bigger and more complicated ones do. I think legal contracts are valuable but this is also balanced against the cost and risk of the project itself.
  • Set up milestone checkpoints for the joint venture partners to pause from the busyness and evaluate how things are going. If both JV partners run other businesses (in my experience, that is frequently the case) then these milestone checkpoints are a good way for everyone to assess the project and get back on the path.

Joint ventures are awesome. They can help you grow your business or provide new streams of income. And they make sense as the next step in a business, especially for small businesses that are not yet ready to hire staff. If you want to grow your business in new and exciting ways this year, start up a joint venture.

Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and he's a real estate investor and a copywriter for real estate investors.

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