“Imagine you had to everything stripped from you and had to start your business all over again from scratch. You have nothing — no business, no money, no contacts — and you can only take one strategy with you. What strategy would you choose to relaunch your business and grow it even bigger?”
This was the question posted to Jay Abraham, to which he prompt replied:
“Beyond the shadow of a doubt, I’d choose endorsed marketing and joint venture relationships.”
The term ‘joint venture’ relationship has been popularly coined by Jay Abraham, marketing guru and consultant. However, the concept has been around longer than we realise, commonly seen in the form of strategic partnerships or alliances.
What is a joint venture?
Today in this article we aim to dive into the specifics of a joint venture relationship, what makes it so useful and how to get started on it on our own.
What is a Joint Venture?
Joint ventures give you the opportunity to create add-ons for your business, enter new markets, gain access to other companies’ resources and more, all while expending minimal effort, time or risk. And the key to success is leveraging on such relationships to help you grow your business.
The marketplace is a competitive world. You need to remain relevant in the marketplace without being commoditised. Why? Because it would make it more difficult for you to differentiate yourself and maximize any form of profit if you are commoditised. You will end up like any other company, without a unique selling proposition of your own.
You need an image and identity to earn the trust of the marketplace.
And joint ventures are one of the best ways to enter the market and gain access to people’s trust.
In fact, it is one of the most powerful ways to make this pre-emptive move. If you execute it wisely, you can get someone else to champion you and put you in a position where your clients see you as their trusted advisor.
The joint venture process allows you to skip the arduous process of slowly trying to convince people to trust you, saving you time and effort, allowing you to immediately achieve your objective.
Looking for Strategic Partners for Joint Ventures
That being said, progressing a joint venture from strangers can take months and even years. Sometimes, ventures like these can get side-lined when companies get too engrossed in their daily operations.
Sometimes, conversations might seem promising, but the ideas you come together may not lead to any action or conclusion. One may commit to move forward, but due to a lack of structure and proper process, partners might not follow through.
Hence, follow-up actions and regular check-ins are important for nurturing partnerships.
It is also important to find the right type of partner. In general partners that are in your industry vertical make for good partners. This means that you should look for partners, who are selling services/products in your supply chain. This way, you can negotiate a long term deal with favourable financing options if you are partners, allowing you to increase production while keeping costs low.
Alternatively, you can partner up with companies who sell products before-after yours. For example, if you are selling milk powder, you might want to partner up with other baby products, such as baby apparel or baby learning materials. If you are selling cars, you might want to partner up with an insurance company. If you are selling watches, have you considered partnering up with a company that specialises in making watch displays?
How, then, can you start looking for this potential partners?
One way to do so is through lead generation.
Leading Solution provides lead generation services through a database analysis. At a low and affordable service fee, we are able to identify industries or companies that are related to your niche and provide you with relevant contact details and information for you to outreach to these companies. Our database is incredibly detailed, with a huge list of local and overseas companies.
If you are interested, feel free to contact us for a custom quote.
Ultimately, to build a strategic partnership, it takes patience. Open doors, and wait for deals to flow to you, and for opportunities to present themselves.
Why Do You Need to use Joint Ventures?
Strategic partners (or joint ventures) are partnerships where you combine your resources in any given area! From frontend staff to backend operation, searching for new ventures can get you discounted prices from buying in bulk together or reduced operating costs.
Essentially joint ventures allow you to elevate credentials, your presence, and your perceived value in the industry, by tapping other’s resources and sharing your own. This would efficiently help you to achieve top-line growth, greater profitability, and enhanced business success. There are advantages for everyone abound.
In many joint venture relationships, for a relatively low cost you can instantly get access to other company’s leads that may have cost them millions of dollars to build up. There so many ways to form a strategic partnership:
- You can work with suppliers, who provide products or services.
- You can work with companies who also serve your target audience.
- You can work with companies who provide pre/post products or services for your clients.
- You could be a middleman and bring two entities together.
- You can do it as a business owner, sharing resources and expertise, be it consulting, marketing training, services. Any quantifiable package that would result in increased savings, profits, greater production, etc.
- You can use it to acquire rights and/or control of items.
- You can license, sell, or rent your client lists, assets, or knowledge to other companies.
- You can create multiple passive income streams.
The key is to be a connection, a middleman where you meet supply with demand and demand with supply. If you need something, in the form of raw materials, or a marketing channel, chances are there is someone out there that can provide it.
The question then becomes, what is it that you have, that is of value, that you can offer to that prospective partner.
Tips on Embarking on Joint Ventures
- Expand your business outreach. A strategic partner beyond your industry could allow you to leverage their infrastructure and capital. Apart from business partners within your industry vertical, see if you can find related industries to partner with. This allows you to have more opportunities for cross-selling and tapping into a market of prospects that you previously had no access to.
- Improve on your product. Invest in research and development to develop more product lines. By acquiring, licensing and packaging your products, you can attain a product line that can be integrated into your system efficiently. Instead of wasting tens of thousands of hours or millions of dollars, on testing and developing your own products. The key is to not only develop products but develop product lines. You want an ecosystem of products, under your company, which you can promote and market easily.
- Extend your business by bringing in new products and services. After improving on your products, have you considered bringing other series of products? Why would you solely depend on a single, isolated product or service when you can better serve your clients’ needs in ever-increasing ways? Bring in related products or services that would give them a holistic experience, which would lead to greater client satisfaction and loyalty.
- Seek diversity. Joint ventures are a powerful yet safe way to diversify and hedge your investments to spread your assets across different industries. It is an awesome way to bring more streams of income to support your business. In addition to that, there would be minimal risk and you can maximise your bottom-line yield.
- Create new businesses. New business units can be variated, diversified, sold or borrowed against to provide new sources of revenue. This would also reduce cost and create synergies for your company. Furthermore, you can be the middleman and bring companies together to increase sales. You can multiply your profits by a few folds for no cash, no extra people, no time on the part of the other side — and if you choose, on your part as well. You can lower the barrier to entry.
- Enhance your competitiveness in existing local, national, or international markets, and immediately increase your market penetration ability. If you are providing services, it is easier to scale your company’s client base. You could sell similar services with different marketing to various demographics. With more clients, you might even be able to enjoy economies of scale.
- Massively boost your market and online presence. As a direct result of Jay’s joint ventures with other people, if you search up his name on Google, you will get (as of this writing) 430,000 hits. He has 300 “name brand” people that recommend him. He does joint ventures for people all the time, and sometimes they do not even make money — but it makes him larger than life. He attains worldwide exposure and in all sorts of places because he understands the mindset that the back end is where you can make a fortune.
- Enter new markets. Joint ventures give you the opportunity to tap on other people’s accumulated knowledge base efforts, learning curves, and developmental research expenses. This makes expanding into other industries much easier and faster.
- Expand your horizons. Be observant and you would discover that there are truly so many ways of making a ton of money either for your business or as a middleman. You will be surprised how you can acquire businesses for nothing, assets, licenses, distribution channels, sales forces.
- Some people want to make more money. Will you be able to help them multiply their profits?
- Some are looking to solve problems that they do not know how to solve. Will you be able to bring solutions to the table?
- Some are willing to pay for convenience. They do not desire to do manual labour. Will you be able to provide them with that?
- Some are lacking the right man for the job. How willing will you be to learn and be the man for the job?
- Some companies have a good product, but poor marketing channels to push the products to the right people. Will you be able to solve this issue for them?
A Case Study – Turning Dusty 8-Tracks into Your Personal Cash Cow
At age 22, Jay was out of a job. He didn’t have a dime to his name. Furthermore, he was married with two kids to feed, and he could not even pay the mortgage. He was worse off in many ways, even compared to people who did not have much money.
In those times, the music industry was still in the awkward era of 8-track tapes. He found a company that was loaded with very well-known, sellable tapes. Though they sold them across the country, business was in a dire state.
They even had an oversupply in their inventory and were sitting idle in a warehouse, gathering dust. Jay decided to strike a deal with a well-known chain of mini-marts in the Midwest.
They would allow him to sell them in their mini-marts on a purely performance basis – paying him only for tapes that were sold. The tapes were sold at $4, Jay got $3, and they made $1. They made 25% profit with no risk. The best part? This deal was made with no inventory and no capital.
“I always try to figure out who needs what I want to do worse than even I do.” – Jay Abraham
Be observant! Then you would become acutely aware that other companies have voids and excess capacity. They aren’t making all the money they want, or they need new products or services, but don’t have them. And the list goes on…
So instead of going to these companies with furtiveness, you need to accost them with confidence that you have the piece of the puzzle that they needed — and in many cases, they needed it worse than you do.
How You Can Become a Master Joint Venturist
“One person’s distress is another person’s opportunity.”
Take this to heart. Always try to look out for any situation where someone has something that somebody else wants or needs, but on their own neither party would probably get down to getting it, or doing it, or combining it. You need to recognize the opportunities to solve other people’s problems that they couldn’t solve themselves.
“Everything in business is either solving a problem somebody has, or fulfilling an opportunity that they’ve wanted to accomplish but never been able to (or never even realized that they wanted to), verbalizing and then transacting it for them.”
The curious thing is that most of the time you do not need to solve their problems directly. For example, in the joint venture with the 8-track tapes, Jay could have bought the whole inventory and then stock it in stores. But this method yields no leverage.
And leverage is a very crucial fundamental concept that should be the focal point of your deal making success.
The Power of Leverage
“Leverage” is a cliché term that is often thrown around in the business world. But what exactly is it? We all know it as the powerful driver that pushes the momentum and direction of any deal it is applied to. Through marketing, you can leverage a lot of things for your business.
For example, you can leverage on a strong searchable website to gain leads through SEO. Or you could leverage on your existing customer base and use newsletter to promote purchases.
Unfortunately, most people utilize leverage in a dangerous way.
In a personal setting, financial leverage is very common. Many would go out and buy a house, or a car, using credit. This essentially places them in a debt situation.
Not all debt is bad. In business, you construct an obligation or a type of debt when you start a business, take a loan and start hiring your employees.
But when you do not have a proper plan to finance the debt, except for praying, this leverage could be a huge burden that would bite you in the ass.
The “Flip Side” Of Leverage Keeps You On High Ground
This “flip side” has infinite upside! Many people spend large amounts of time, effort, and capital to build, acquire, or accumulate assets — tangible and intangible — that they fail to take advantage of. That’s the leverage! The investment is already in — capital, time, effort, now you just need to capitalize on them.
For mini marts, their sunk cost is in spending millions of dollars on building structures, stocking them with products and advertising to generate traffic, then selling those products.
Jay just rode on these investments to sell his 8-tracks, without even having to spend a dime. He took advantage of the awareness that they did not want to risk spending money on something unproven.
But of course, they would be glad to profit without undertaking any risk. And the company selling the tapes had access to another distribution network to sell their excess stock! It was definitely a win-win!
In conclusion, the key is to capitalize on other people’s underutilized, overlooked, undervalued, underperforming assets or opportunities.
Doing business as an island is expensive.
Most of us do not have the resources, network, capabilities to know how to get them. We would have to carry out insane amounts of research and cold calling. We probably need to hire a lot of people as well to execute our operations. Even for advertising, we would have to spend long amounts of time creating campaigns, correspondence, and handling staff.
A joint venture opens more opportunities and networks for you to tap upon. The opportunity of a joint venture presents itself when you can value-add to the setting. In order to value-add, you need to look for areas or aspects to leverage upon.
Sometimes you just need the right people in the right place and the right partner for the right deal.