What To Consider Before a JV or Strategic Alliance
While there are magnitude of benefits to forming strategic
alliances and joint ventures (JV) to build your business, there are certain aspects
you should consider beforehand.
1.) Goals
Firstly, it’s important to outline your short and long term
goals before engaging in a strategic alliance or joint venture. These are also
known as your strategic objectives. Whether it’s for marketing, promotion, lead
generation, expansion, new technology, risk reduction or production purposes;
outline exactly what your business needs, and what you can offer realistically
in return.
Defining your goals will set you on the right track from the
beginning, and will ensure clear communication with any potential allies. In
other words, establishing your goals is like drawing your blueprint or roadmap
of where you are headed to, which should be outlined as such in your marketing
plan.
2.) Potential Partner
Once you have your goals clearly outlined, the next important
step is to establish the parameters around a suitable strategic partner.
Finding a well matched partner is crucial in any joint ventures you form, and
this is how JV Hero came to be! There are three important things to look for a
potential partner: complimentary businesses (not direct competition), the same
or similar target market/demographic and similar strategic goals and
objectives.
We’ve tried to make finding a perfect partner as painless and
easy as possible, but if your listing on JV Hero brings you in many different
partnership options, you can increase your chances by measuring your
perspective partners by screening and making a shortlist. The criteria should
be based both on the help it can give to your venture and the 3 things
mentioned above.
Screening involves checking. This reveals the things you need
to know about the potential partner. Verifying on the other hand ensures that
the details given by your potential co-venturer are true. Although businesses
are often honest in disclosing information to a future co-venturer, it is a
good practice to verify.
3.) JV or Alliance Structure
From the goal(s) you want to achieve, you can define the type
of joint venture (JV) you want to form. Here at JV Hero, we’ve broken it down
into 3 major types of promotional alliances. They are:
1. Mutual Benefit
2. Profit Shares
3. Other (all other types or customised versions)
For more in depth information about the different alliances
and ventures types best for lead generation, see our Alliance Types
page.
4.) Terms and agreement
Finally, it is equally important to discuss the things you
want to achieve under the joint venture with another company. The
organizational structure, limitations, participation, share, income allocation,
compensation, disputes, and everything that are bounded by the formation of the
joint venture should be laid down clearly.
Forming a joint venture with another company or individual
knowing these things may help you get off to a good start. Once you have
considered all options, speak with your potential partner about how they’d like
to proceed with clarifying the agreement. The terms are agreed upon with
anything from a handshake to a legal contract, depending on the terms of the
partnership.
Check out our Legal Requirements page for
more information.
