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Should You Consider Joint Venture?

The answer is, of course! Why Not?

The real issue here is not whether you should or should not consider Joint Venture or Strategic Alliance for your business. The problem is that most businesses do not understand what a joint venture is, or how to structure one, how to make it work, what are the benefits and disadvantages, how to manage one, how to split the profits, how to monitor the performance, what the structure of the joint venture should look like, what kind of agreements to use and all kinds of other questions. The purpose of this website is to educate all potential joint venture partner so that they will be well informed and educated before taking the next step towards working with our company. So we will do our best to educate and not hold back any information towards that aim.

Who are you?

  • Do you currently own a business? (and would like to expand your business further?)
  • Are you thinking of starting one? (and would like to find more ways to bring in revenue?)
  • Are you currently an employee of a company? (and would like to bring in more revenue for your company for a profit share?)
  • Are you considering to be a joint venture broker? (and help company to grow while earning a share of the profits?)

Joint venture is nothing more than synergistic partnership where two or more parties come together collaboratively making the whole stronger and mutually beneficial for all involved. You bring onto the table your strengths while you compensate for your weaknesses using the joint venture.

Excess Inventory Example

Let’s say that you are own a business of some kind and you currently have excess inventory in your warehouse that your sales force are unable to unload. The stocks are tying up capital which you could otherwise allocate to some other more profitable use. Even worse, the longer the stock stays in the warehouse, the quality and state of the inventory deteriorate and you may not even sell them profitably after that. There are also other risk of breakage, theft, and other unforeseen circumstances. In this case, what can you do? You would normally do either or a combination of these things:

  • Put on a warehouse sale – selling the items at cost, for a small profit, or even at a loss
  • Buy expensive ads in newspaper, magazine, or online advertising
  • Hire more sales force thereby increasing your overhead
  • or similar kind of actions along these lines to get rid of the excess inventory.

Instead, what you could do separately, or as a combination with the above is to initiate joint venture deals with various partners that could compensate for your weaknesses. With a joint venture, you could:

  • Partner with existing distribution centers to sell your inventory on consignment basis and a share of the profits (so you can still get rid of your inventory with a healthy margin instead of a steep discount while forging a new partnership for future promotions)
  • Partner with existing online retailers to sell your product while you maintain the fulfillment of the delivery (thereby decreasing the need to hire expensive sales force and increasing your overheads)
  • Do a barter trade with other businesses who have a need for your inventory in exchange for their stock where you can turn around to sell or use for your self. (For example, let’s say you are selling office furniture product. You can approach a radio station, or magazine or newspaper or newsletter organization that has a large circulation to barter trade for their unsold advertising space. You will give them your inventory at retail price, while they will give you the ad space at retail or some discount for you to promote other parts of your business. In this case, no money has changed hands while you are actually making money because you are buying the ad space for a discount, while you are selling your inventory at retail price)

Unused production capacity

Do you have unused production capacity such as machinery and equipment that you are not using and is sitting idle due to a slow down in business? Rather than letting these machinery and equipment sit idle, you could joint venture with your competitors or other businesses and industries who have a need for such machinery and equipment in exchange for a fee to use your equipment, or even for a profit share of the production from the use of your machinery.

Excess Staff or Workforce?

Do you temporarily have an excess of workforce due to a seasonality issue related to your industry and they are not being used for their full capacity but you are still liable to pay their salary in full? Why not ‘rent’ your workforce out for that period of time when business is slow to other joint venture partner where they will either pay for your workforce’s overheads for using them, or you can get a share of the profits from the production created by your sales force for your joint venture partners?

Excess office or storage or factory space?

Do you currently have unused storage space or factory space or office space which is sitting empty? Why not rent them out or joint venture with a partner to use those spaces for a share of the profits from their production from using that space? You will be able to maximize your assets while your joint venture partner can reduce their overheads and pay for only what they use instead of leasing or renting a bigger space than they need.

Joint Venture is a Mindset

Joint venture is nothing more than two or more parties coming together for mutual benefits. Even more than that, it is a mind set of mutual collaboration that many people can’t seem to resonate with. What do I mean by that?

Let me give you an example:

You could joint venture with your competitors even. Now, when you think of competitors, what usually comes up in your mind? You want them to go deep underwater as soon as possible, right? That is only natural because they are also thinking the same about you.

However, what if your competitors are selling some products that you do not carry, but that which your customer base also needs? Wouldn’t you be better off joint venturing with your competitor to sell that product for them instead of losing your market share to them? Vice-versa.

All that is required to make joint venture work is to have a change in mindset to a collaborative, progressive and mutually beneficial to all type of thinking. Always remember, whatever your weaknesses are, you can compensate for it by having the right joint venture in place to cover for it.

Thank you for reading until the end. Please leave a comment about your thoughts and if you have any joint venture ideas that you would like to explore with us, please leave a comment or get in touch with us via our contact form or via Facebook.

Looking forward to serve you further.

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