When two companies combine their resources, connections and capacities to create a baby company, it is called as a joint venture. This is different from a strategic alliance that only involves the sharing of resources or capacities. A ‘baby’ company has to be created for it to be considered as a joint venture.
Having a joint venture is attractive because it gives your company a chance to have access to a greater market, have more resources, widen your capacity and increase your expertise. Also, it allows two or more companies to work in a project that is made for a particular purpose – be it increased revenues, improve existing resources or collaborate to achieve a particular goal.
Types of Joint Venture
There are different ways to create a joint venture.
First, you can cooperate. This means that the two companies that are involved in creating a new company will handle the operations by themselves. This may involve joint responsibilities as well as joint resources and capabilities.
Meanwhile, the two companies may be too busy to handle the ‘baby’ company. When this happens, they may want to create a separate joint venture. This is a type of joint venture where the two companies create the new company but they are not responsible for the new company. Instead, a third party company will handle all of the operations.
Then, there is also a business partnership such as mergers and acquisitions. In this type of partnership, a baby company is not created. Instead, two businesses are merged into one. Still, a new company is created but the parents are not retained. Instead, they are fused into the baby company.
Now that you know the different types of joint ventures available, you are probably wondering what’s best for you. Well, you may need some legal advice for that. After all, this is not something that you can easily decide for yourself. You may need to weigh the pros and cons of each type and decide according to what will help your company the most.
Joint Venture Benefits and Risks
There are many benefits to forming a joint venture. First, it allows you to expand your market. Once you partner with another company, you’ll immediately have access to their market as well. If that is a market that you are interested in, then it can immediately have a positive impact on your company’s profits. Next, it can also increase the capacity and skills of your own company. When you form a joint venture partnership, you do not only have access to the market but to their capacities and skills as well. In some cases, your partner company may even offer to train your staff. This is where knowledge spillovers come in. Third, you’ll also get access to your partner’s resources. It is not just skills and markets that are shared, you’ll also get access to their resources. Lastly, you’ll love join ventures because the baby company is co-owned with your partner. This means that the risk of it failing is significantly lower. And even if it did fail, the risk is spread out between partners.
Even though joint ventures may seem very attractive, it does come with a set of risks. First, there is no guarantee that the partnership will work. You may find that you’ll be up against tons of issues especially when it comes to communication and achieving your goals. Next, there may even be some issues on the imbalance in expertise, resources and market access. This imbalance can cause the partner to feel that they are not getting enough from the deal. Another risk is the fusion of cultures. This is apparent for joint ventures that are situated in different countries. Lastly, there may be some issues when it comes to control or leadership.
Are You Ready for a Joint Venture?
The answer to this question cannot really be answered by a straight ‘Yes’ or ‘No’. In fact, I suggest that you delve deeper into your company to find out if you are ready to do this.
First, it is important to look into your current business strategy. You can do this by employing a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis or PEST (Political, Environmental, Social and Technological) analysis. Why should you do this? This will help you assess the current state of your company and will help you decide on the direction on where you want to go.
Next, you may want to do some competitor analysis. This can be as simple as visiting your competitor’s place of business or by looking into their existing business strategies. This will help you see if they are already doing some joint ventures to get by or they have skills that you don’t. This will immediately uncover some steps that they are doing that you are currently not doing. Once you find that, it can be your cue to move towards that direction.
Third, you should also look inside your company. You need to assess how receptive your employees are to the idea of a joint venture and if they can easily adjust when it happens. Be clear about your expectations and outputs. This will put everyone in the same page and will ultimately help you reach your goals at a faster rate.
Lastly, think about why you want to have a joint venture. Do you want it to expand your market? Do you want to do it so that you can learn new skills? Remember that joint ventures are not just for marketing. You can also use it for research and development. It is very important to be very specific on what you want before you proceed.
Planning Your Joint Venture
Once you have decided that you’ll push through with the joint venture, it is time to create your plan. This will help you sort out your objectives, define your possible contributions and define what you want from a joint venture partner. This is also a time when you should decide on the expectations in you joint venture agreement. This way, you have everything sorted out right before you look for a partner.
How to Choose Your Joint Venture Partner
Now that the plan is in place, it is time to look for a partner. You see, choosing a partner is not as easy as picking a company and sending a proposal. There’s so much more to it than that.
First, you must define the type of partner that you need. Do you need to have better access to your supplier? Do you want to work with a small business? Do you need to have better access to your customers? Your joint venture partner will highly depend on your goal. So it is very important to define the objective right before you choose a partner.
Second, you must identify potential partners that fit your goal. You have to define the contributions that each partner can put to the table and why you want to partner with them. You should go through your list of suppliers, customers and small businesses that you have worked with in the past. Why do this? The initial connection will make the joint venture proposal easier. In fact, it is advisable to only work with partners that you have worked with before. This way, the adjustment will be easier.
Third, you should create a way to assess your partner before you proceed with the agreement. This can be as simply as a set of questions that you need to answer. You can look at their financial records to see if they are really worth your time and if they have their own experience about working with joint venture partners before.
Lastly, you should make sure that your agreement should be able to protect your own interests. In joint venture agreements, a set of risks can also happen. When this happens, you should be able to preserve your intellectual property through a confidentiality agreement or other statements in your contract.
How to Create a Joint Venture Agreement
Once you have decided on your partner, the joint venture agreement is just a structure away from coming into fruition. This is where you will come up with the actual agreement.
For this, you have to consider the following:
Objectives – You cannot have an agreement if you are not sure that the two parties are on the same page. Having a set of objectives will ensure that both companies have the same goal in mind.
Contributions – A joint venture agreement will not be complete without a set of contributions. But it is not just about having some contributions. You should also make sure that the contributions are specified. This way, there will not be disagreements between the two parties.
Intellectual Property – Intellectual property can be an issue since resources and access to networks are shared. It is very important to specify the limits on intellectual properties and how it can be used.
Management and Control – As I have said earlier, management and control can be an issue between joint venture partners. To prevent this, you should specify who has control over which. All of these should be clearly written in your joint venture agreement.
Disputes and Termination – Lastly, you should also specify the terms on which you’ll terminate the agreement. This can be a simple end date for your joint venture agreement or it can include terms that must be broken for the relationship to be terminated.
How to Make Your Relationship Work
While the joint venture agreement gives you all the goals and expectations on paper, it is still different when implemented. Therefore, you must do your share of the work if you want to succeed in your agreement.
First, it is important to keep your communication lines open. This will allow you to work with your partner seamlessly. It doesn’t matter if you are in different companies. As long as you keep communication smooth, then running a baby company will be easy.
Next, you should also employ some evaluation measures for your joint venture agreement. This can come as a simple performance scale or you can perform inspections or have output targets. This will allow you to ensure that everything is working as it should.
Third, it is very important to be open to the fact that there will always be an adjustment period for every joint venture. Unless you have worked before, both companies may take some time to get used to each other. Understanding this will help you have a better relationship with each other moving forward.
How to End a Joint Venture
As I have indicated earlier, termination is very important in an agreement because it allows the parties to move within a set of terms. This can as simple as how intellectual property is shared or how the risks and income will be shared in the future. Having everything down on paper will clearly indicate why a joint venture agreement may be terminated in case one party fails to fulfill their side of the agreement.
Also, you may end a joint venture if it has a specific end date. Some baby companies can only be alive for a specific time. With this, the joint venture agreement ends naturally.
Joint Venture Referral Program Software
When creating your Joint Venture referral program, you will need software that will help you create, manage, and track your Joint Venture partners.
There are many tools on the market to help you achieve your Joint Venture goals.
However, when choosing your Joint Venture software, you should be looking for a platform that
- Gives you multiple methods of tracking your referrals.
- Makes it easy to promote on social media networks
- Makes it easy to reward your partners
- Makes it for partners to register
- Gives your partners a dashboard for tracking referrals
- Gives your partners a unique referral link
- Gives your partners detailed stats of their referrals
- Gives you an admin dashboard to managing your Joint Venture program
- Allows you to add promotional materials for your partners
- Makes it easy to pay your partners
- Gives you a Joint Venture website
- And so much more!
When you find a platform that allows you to do all of this, then you are halfway there to a successful Joint Venture referral program.
In this guide, we are going to be showing you how to set up a successful Joint Venture referral program using Omnistar Affiliate.
Omnistar Affiliate makes it easy to create and manage a referral program. Omnistar Affiliate helps businesses increase sales through referral marketing.
Here’s a video showing you one of the ways Omnistar Affiliate can help you grow with a Joint Venture referral program.
Now that you know the best software to use for your Joint Venture referral program, it is time to create your Joint Venture Referral Program.
How to Set Up a Joint Venture Referral Program
Step 1 – Create your Joint Venture Referral Program
From the admin control panel of Omnistar Affiliate, go to Campaigns.
Click Add to create your Joint Venture referral program.
From this page, give your Joint Venture referral program a name. Next, enter a description of your program. This description will be visible to your partners from their dashboard. Lastly, please specify how you want to reward your partners. Will you be paying them a flat fee? A percentage of sales? Or, are you just keeping track of leads?
Once you enter this information, click the Next button.
On this second and final step of creating your Joint Venture referral program, you will need to enter the url of where customers will be redirected to after they click on your partner’s link.
Usually, this is the link to your homepage. Or, it can be a link to your product page. Just enter the page you want customers taken to where they can start the process of signing up.
Once you have specified your landing page, click Finish.
Step 2 – Decide How to Add Partners to the Joint Venture
Now that you have created your Joint Venture referral program, it is now time to decide how you will add your partners to the program.
Omnistar Affiliate provides multiple methods of adding your partners.
Below, you will find the top 4 methods of adding partners to your joint venture program.
1. Use the Email & Share Widget
You can embed our social share widget to your website. This widget will only ask your partners for their email address. Once they enter their email address, they can immediately promote you.
Also, we send them an email address with their partner dashboard details. This method is the fastest way to add partners and have them promote you immediately.
Here’s a quick video with an overview.
2. Joint Venture Website
The second method of adding partners to your Joint Venture is by using your Joint Venture website.
Omnistar Affiliate provides you with a website you can use for your Joint Venture. This website can be customized with your branding.
The Joint Venture website provides details for your partners. They can learn about the program, register, and log in from this website.
Here’s a quick video showing you how to customize your joint venture website.
3. Create a Partner Registration Form
Another great way of adding partners to your program is by creating a registration form that you embed on your current website.
This method is great because the registration form seamlessly integrates with your website.
Additionally, you can use CSS to customize the look and feel of the registration form. Here’s an example of a form embedded on a website.
4. Add Partners from Admin Dashboard
If you choose to register and add your partners manually, you can do so from the admin dashboard of Omnistar Affiliate.
Click Manager Users and then click Add Users.
You can enter your partners registration details and add them to your Joint Venture program from here.
Step 3 – Give Your Partners Promotional Materials
Your joint venture partners will need information to use to promote you.
They can get these promotion materials from their partner dashboard. To add this information, follow these steps.
From your admin dashboard, click campaigns.
Then click the link for manage marketing tools.
In the Manage Marketing Tools section, you will be able to add and upload the promotion materials your partners can use to promote you.
That’s it. You have finished creating your Joint Venture referral program.
By following these steps, you should have:
- Added your Joint Venture referral program
- Created a method for adding partners to your Joint Venture referral program
- And provided your partners with promotional materials
All these 3 steps also made you familiar with your Omnistar Affiliate admin control panel.
Let’s now make you familiar with your referral partners dashboard.
Joint Venture Partner’s Dashboard
The partner dashboard is where your Joint Venture partners will keep track of their rewards and success.
It is a very user friendly and easy to use partner dashboard.
As soon as the partner logs in, they will immediately see quick stats to see their progress.
Also, from the home page of the partner dashboard, partners can quickly promote you. Here’s the partner dashboard home page.
Below the quick stats table, you will see the promote widget.
The first tab of the promote widget is the referral link which you can see here.
This referral link can be used anywhere. Partners can send this to their friends. Embed in websites, blogs, etc.
The next tabs in the promote widget allow your partner to easily promote on social media networks. Here’s an example of what the partner will see if they choose to promote you using Twitter.
The next page after the home page, is the rewards page.
This is where your partners will keep track of their rewards. They will see detailed reports of successful referrals here.
Another important page to be familiar with is the Stats page.
This page breaks down the referral reports.
You can see social promotion stats, click stats, conversions, etc.
The last section to be familiar with is the partner recruiting widget.
The link in this recruiting widget allows your partners to recruit and add other partners to your Joint Venture referral program.
That is a quick summary of the partner dashboard.
Now, let’s take a look at how you will reward your partners.
How to Reward Partners
When your Joint Venture partners send successful referrals Omnistar Affiliate keeps track of the success in the Rewards section.
Right now we are going to show you this section and how you will approve and reward your partners.
From the Omnistar Affiliate dashboard, click on Rewards.
You will get redirected to this Rewards page and from here you will see reports of successful referrals.
To reward your partners, click on Manage Invoices.
From the Manage Invoices section, you can reward your partners.
To pay them all, check this box.
Then scroll down and from the dropdown select Create PayPal Mass Payment File.
This file will allow you to pay all your partners at once in PayPal.
This is the quickest method of rewarding your partners if you’re paying them commissions.
A successful joint venture depends on different things. First, it highly depends on whether or not the parties are on the same page. Next, it depends on how well you have planned your agreement. With a good plan, you may have an agreement that is sure to work. Third, it needs experience. Sure, your first joint venture agreement may not work out as you want it to be. But it will help you gain new experience so that you can handle future joint ventures better.
So what do you think? Is your company ready for a joint venture? Tap into this opportunity to access new resources, skills and markets. You may not know it but having a joint venture just might be the missing element that can springboard you to success.