When clients approach me with helping them with their businesses, the first thing I ask is, “Who do you know well in your industry?” I ask this question because small businesses need other small businesses to help grow. The misconception in small business is that there is a ‘do it all by myself’ mentality. The truth is that you can grow your business as well as another’s by creating joint ventures.
Joint Ventures can Take Your Business to Another Level.
There are a number of large companies that utilize joint ventures to help grow their business. One of the most famous is that of Starbucks and Barnes & Noble. When Barnes & Noble was at its height, Starbucks was an unknown coffee shop nestled inside a bookstore. This joint venture allowed people to get hooked on books and coffee. It allowed Starbucks to grow into a large brand with its own stores and locations.
Barnes & Noble received benefits as well. The bookstore was designed for people to stay and read. This coffee shop concept allowed customers to stay in the bookstore when they got hungry and made them more likely to shop and buy books.
Understand Your Strengths and Weaknesses.
What do you have that someone else needs? What do they have that you need? Joint ventures are meant to accentuate the strengths of both companies and support the weaknesses in each. If you are a fashion blogger and you know a fashion photographer, you can work together to create opportunities for each business. The blogger needs pictures and the photographer needs a place to show his/her pictures. Adding text and descriptions to a photograph allows the photographer’s pictures to come to life. It is a win–win.
You may be saying to yourself, “Well, I can just buy pictures or I can just blog myself. “Yes, that is true, but if one’s strength is in writing and the other’s strength is in photography, why would you not consider working together? You could create a new blog that reaches both of your audiences. You could create a magazine or a LinkedIn group that brings people to your joint venture. The point is that you come together to benefit each other.
Prioritize and Commit in the Areas that Matter.
A joint venture is not a partnership in the traditional sense. It is temporary and specific. This means that the joint venture may last for a specific amount of time or exist for a specific purpose. Perhaps you need more capacity to bid on a contract. If this is the case you would venture with another company to help you add the necessary amount of resources to complete the job. Perhaps you want to offer a new service and in order to do that, a specific skill set is needed that you do not have. You can create a joint venture to fulfill that particular need.
No matter the purpose, you need to know what your limitations are and what you are willing to commit. Sometimes a new venture fits seamlessly within what you are already doing. Sometimes it does not. If it doesn’t, you need to determine what you are willing to commit to in order to make the venture successful. Anything less will mean the failure of the venture.
Get Professional Advice!
Joint ventures come in many shapes and sizes. They may contain multiple parties and parts which can make it difficult to manage. I believe it is important to have an attorney and a CPA involved with the formation of the venture. The attorney will help you determine the correct form of the venture, and the CPA can help evaluate each party’s financial ability to sustain the venture.
It is important to discuss any issues or concerns early in the venture. Do not assume that there will be no issues or problems throughout the venture. Instead, assume there will be problems and prepare for them in advance.