What is a joint venture?

Joint ventures

Joint ventures are a kind of partnering but with a ‘strategic twist’.

The simplest way to view a joint venture is two or more parties coming together specifically for the purpose of entering into a relationship and a transaction that benefits both or more parties, the marketplace, and client bases.

Could also be considered as a “relationship”, “transaction”, “opportunity” or “strategic alliance” which has very clear benefits to those involved. It’s the ultimate business growth machine and we consider it as one of the easiest, fastest, and simplest ways to gain multiple streams of income that work for you.

Joint ventures can be a strategic partnering where you combine efforts in anything from getting a better price for goods that you are buying in bulk together…to finding a way to show an owner how to remonetize their inactive buyers. Crucially, the way it is carried out requires minimal time, effort, risk, or expense to you.

It’s more than just a cross-promotion between two organizations. When you look at joint ventures, they hugely focus on leveraging two key elements:

• Return on effort.
• Return on your relationships.

Return of effort

How can you get the highest leverage or highest return on not just your money but also your time, effort, and energy on what you put in. Joint ventures and strategic alliances, in many cases, allow you to access a marketplace, workforce, client base, or marketplace without having to go through the time and trouble or starting from scratch. There is a great opportunity to find a way to make significant gains and increase your growth in ways that require minimal effort compared to having to start a new business, enter a new market, or take on a new product line.

Return of relationships

One asset that we find many business owners forget about is the power of their relationships that they have within their network. Relationship resources are often overlooked because it’s easy to misunderstand the concept of a return on a relationship. But, if you can see that you have the ability to create value or solve problems for other people, and the ability to recognize the opportunities that exist within your network you may find a number of strategic ways that you could connect and leverage that relationship.

Benefits of joint ventures

There are many reasons why you should consider doing a joint venture or strategic alliance. Joint ventures tend to be popular with big brands that need to stay ahead of their competition in a fast-moving market because they realize that by partnering with another brand, they’re able to access more resources, allowing them to build a stronger entity than they can alone. There’s no reason though, why small, or medium-sized enterprises can’t or should not access the same benefits that larger corporations do. Here are some of the reasons and benefits you can experience too if you decide to do a joint venture.

• Gain access to scale, range, and speed.

They allow you to benefit from the access to scaling your business offering, increasing the range and speed at which you offer what you do through a strategic alliance.

• Develop products further.

You can get products through your business or have opportunities to offer them in a different way through joint ventures.

• Offer more products or services.

Again, if you have access to a larger or different client base then you can offer more products or services. You may be able to offer products or services that your alliance partner provides and vice versa. You do not need to rely on one isolated product or service. You can respond to your clients’ needs in an ever-evolving way that will enhance your bottom line.

• Expand your market reach.

You can expand who and how you get your products and services out further. If you are able to advertise through someone else, or put out a referral scheme, then your company is being spoken highly of in front of new prospective clients.

• Lower your business risk.

By increasing the streams of revenue, the chances to sell, and the opportunities to build relationships with your clients you are minimizing your business risk.

• Create new business entities.

You create a new entity or aspect of your business; this gives you another distribution channel, something that can be sold, borrowed from, or leveraged to grow and expand your current operations.

• Enhance your market presence.

It takes time to build a market presence, and often longer to build reputation and authority within the market. Depending on the joint venture, you can enhance your market presence by being more visible, more available in the market than ever before because your agreement recognizes that.

• Enter new markets.

You can harness the power and strength of position that your joint venturing business partner has already acquired. They may be in a new market that you haven’t explored yourself, but this provides the opportunity for you to gain access to it with little risk and upfront cost.

• Diversify

If you have ever thought about investing, broadening your base, bringing another product, line or service, investment, or experiment to your business you have the ability to access this with minimal risk and maximum opportunity for it to be profitable. You can diversify safely whilst you hedge your bet on something potentially bigger or better.

• Improve your outlook.

If you are able to increase the streams of revenue, then you are able to minimize your business risk, grow different entities of your business, expand your market presence which all helps to build a more sustainable business. If you can start, scale, and sustain your business then you have the opportunity to shape the best outlook possible for it.

You can keep in mind some of the additional benefits of forming a joint venture or strategic alliance. These can be endlessly thought-of; however, we recognize that the most significant ones are:

• Easily formed.
• Massively increases sales and profitability.
• Improves your image, reputation, and authority.
• Adds value to clients.
• Gain a competitive advantage.
• More flexibility.
• Requires minimal investment.
• Enhanced marketing and selling ability.