Joint ventures are critical to small business and highly beneficial to all other size business. The secret to all successful negotiations is the "Win-Win" scenario. All negotiations can be "Win-Win" regardless of what you may have heard. I have staked my company on it more than once. Oh, don't quote the Trump here, even he knows the power of the "Win-Win", and understand he is not self made, hence the EGO.
All good joint ventures must begin & end with a Win-Win mentality on both sides. No exceptions. I shall provide an example as is my usual fashion:
I had investigated a business opportunity not too long ago centered on a Web based service. The owner of the particular business we were interested in was a part time Entrepreneur and a full time employee. We wanted to enter the industry this company was profiting and operating in, so we made contact to multiple suppliers in the same industry. We found this Entrepreneur through one of the suppliers. (Hint: Seek Suppliers in an industry you are investigating, eventually one knows the other etc.).
After some polite virtual conversation over email I determined he was a part time Entrepreneur. No Entrepreneur is truly part time, they are just not yet ready to give up the perceived security of their full time job. I immediately proposed a joint venture with him if he could prove his profits and supply his customer base once the deal is signed. Don't get caught up in the details of the contract, I severely summarizing here.
I built a scenario with him: My company builds the e-commerce website, manages the personnel & operations, we pay for the marketing and fund the startup expenses (basically marketing). He would be responsible for providing his customer base of just under 300, which most were returning, and he would run the marketing like had been doing but at a larger scale. We required a marketing plan reflecting projections of 4 times his normal revenue. (Hint: All Investors care about scaling up your business. If not, they want a lifestyle business).
So here is the "Win-Win"; he supplies a marketing plan projecting 4 times revenue and a customer base of just under 300 for 45% ownership interest in the new LLC.
We provide operations management, marketing funds, basically all costs and the technology for 55% ownership interest as the General Partner of the LLC.
He is not required to quit his job and we make a proper investment. So now you ask, what if his marketing plan doesn't work? Well we buy him out with a hefty profit and we move 1-2 of our marketing people to the project and now we own 100% of it. But what if he wants to buy you out? We stipulate it properly in the beginning when and how, he agrees, buys us out later and we made quite a decent profit!
Side note: We would have gone 50%/50% but needed to retain General Partnership interest because he was fully employed by someone else. We don't risk providing equal control to someone not fully dedicated.
I hope this gets your creative juices flowing to reorganize all of your negotiations to a "Win-Win" scenario! Remember, it can always be done.
All good joint ventures must begin & end with a Win-Win mentality on both sides. No exceptions. I shall provide an example as is my usual fashion:
I had investigated a business opportunity not too long ago centered on a Web based service. The owner of the particular business we were interested in was a part time Entrepreneur and a full time employee. We wanted to enter the industry this company was profiting and operating in, so we made contact to multiple suppliers in the same industry. We found this Entrepreneur through one of the suppliers. (Hint: Seek Suppliers in an industry you are investigating, eventually one knows the other etc.).
After some polite virtual conversation over email I determined he was a part time Entrepreneur. No Entrepreneur is truly part time, they are just not yet ready to give up the perceived security of their full time job. I immediately proposed a joint venture with him if he could prove his profits and supply his customer base once the deal is signed. Don't get caught up in the details of the contract, I severely summarizing here.
I built a scenario with him: My company builds the e-commerce website, manages the personnel & operations, we pay for the marketing and fund the startup expenses (basically marketing). He would be responsible for providing his customer base of just under 300, which most were returning, and he would run the marketing like had been doing but at a larger scale. We required a marketing plan reflecting projections of 4 times his normal revenue. (Hint: All Investors care about scaling up your business. If not, they want a lifestyle business).
So here is the "Win-Win"; he supplies a marketing plan projecting 4 times revenue and a customer base of just under 300 for 45% ownership interest in the new LLC.
We provide operations management, marketing funds, basically all costs and the technology for 55% ownership interest as the General Partner of the LLC.
He is not required to quit his job and we make a proper investment. So now you ask, what if his marketing plan doesn't work? Well we buy him out with a hefty profit and we move 1-2 of our marketing people to the project and now we own 100% of it. But what if he wants to buy you out? We stipulate it properly in the beginning when and how, he agrees, buys us out later and we made quite a decent profit!
Side note: We would have gone 50%/50% but needed to retain General Partnership interest because he was fully employed by someone else. We don't risk providing equal control to someone not fully dedicated.
I hope this gets your creative juices flowing to reorganize all of your negotiations to a "Win-Win" scenario! Remember, it can always be done.
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