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How to do a Joint Venture

Adrian Singer, 06-01-2008
We do a lot of Joint Ventures here at SoftwareProjects.

Many turn out successful, some fail but every single one is carefully planned and monitored. If there's no money in it after 90 days, we're out.

Most businesses and entrepreneurs who approach SoftwareProjects for a Joint Venture, get rejected by our gatekeepers. Not because it's not a good fit, but simply because most people don't know how to position and sell a JV.

So I've decided to put together a basic "How to do a Joint Venture" guide, complete with a template JV Executive Summary document for you to download.

Step 1: Identify Potential JV Partners

Great tool to find JV partners: Google.

In a typical JV, one partner brings traffic and the other brings IP (Intellectual Property) to the table.

Traffic = Eyeballs. Ideally qualified eyeballs as in prospects who are actively looking for the product/service you're selling

IP = Software product, an ebook, a service, business know-how, a database/list, algorithm, patent etc.

Understand what you're bringing to the table and then Google for matching partners that have what you need.

Examples:

* You have a new product/service, you're looking for a partner with an existing list/website who will promote your stuff to his followers.

* You're a gifted software engineer, you're looking for a marketer to help convert your skills into mega bucks.

Important things to remember:

* Stay away from Gurus. Gurus are in the business of selling their own products and educational information to their followers. Unless you have a prior relationship, you'll have a very hard time selling your JV to a guru.

* Pick potential JV partners who are in your niche. Someone having a huge list of people who are interested in diving equipment, is not a good fit for your vitamin products.


Step 2: Crunch the numbers

Quantify what you've got and work out a business model for the Joint Venture partnership.

A joint venture is all about capitalizing on the strength of each partner, to generate more revenues than what each party could accomplish on it's own.

It is very important to attach a dollar value to what each partner brings to the table. This will help packaging the JV, keeping everyone comfortable about the agreement and determining a fair revenue split.

Examples:

* I have a product that was developed for 3 years by 2 engineers. It sells for $49/month and we've got 100 active customers. I am looking for traffic and willing to pay a 20% recurring commission.

* I have a membership site with a monthly newsletter. The newsletter is mailed out on the first of the month to 50,000 recipients with a 23% open rate and 11% click-through rate.

* I love to travel. I have been traveling around the world for the past 6 years and wrote 200 pages of tips on how to get by when you're traveling abroad.


Step 3: Package and sell the JV

Once you've identified a list of potential JV partners, analyzed what each partner can bring and attached a dollar value to your offering, it is time to approach the prospects and sell them on your idea.

Unfortunately, this is the most important yet overlooked step.

I lost count of how many times we get approached by CEOs of respectible companies, sending emails saying "financial projections are awesome", "we should really do some business together", "let's talk about a partnership" or my personal pet peeve "we have a great product, no customers yet but the market is huge!"

Wakeup call.

This is the information age. We're all suffering from information overload, all trying to accomplish 10 things at once and all have a list of projects on our ToDo list that will never get done because there's not enough time.

To sell a potential partner on the idea of doing a JV with you, send a short one page JV executive summary, outlining in a few short words what your project is about, why you feel this is a good fit and most importantly - the estimated short term opportunity cost / opportunity gain.

If you can't keep everything down to one page (without reducing font size so that I need a magnifying glass to read it), delete all and start again.

Luckily for you, I'm attaching our tried and tested JV Executive Summary. You can download this template here.

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Remember JV is a numbers game. The more JV proposals you send out, the higher your chances are that you'll get a "yes".

Follow the steps I described, use the attached JV Executive Summary template and you'll significantly increase your chances of making it happen.

Good luck!

MIke, 06-01-2008
Thanks a ton for the information, and more importantly, for the template. Cheers.
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