Leading a Joint Venture

When initiating any Joint Venture, it’s important to “lead it”. By that, I mean you understand that you have to manage it, direct it, control it, and sustain it. Don’t think you can just set the JV up and walk away – in most cases it will simply shrivel up and die on the vine. There are a few stages to this process and all the stages are equally important.

1. Ask for what you want. Be very specific. Tell the other partner exactly what you want them to do, why, when, and how. Discuss the time frame, the exit strategy, the payment method, when payment will take place, the tracking method. Dates, times, amounts. If you are both in agreement with everything, move to stage #2.

2. Create a simple but complete Memorandum of Understanding. There are many templates available on the Internet. Simply Google “Memorandum of Understanding”. This outlines exactly what your agreement is, who will do what, by when, and what the consequences are if either party does not perform, including an exit strategy. Include dates, minimum production, the wording of letters, sales and marketing tools, samples, everything you can possibly think of, so that there are no misunderstandings later on. Is the percentage paid to the JV partner a percentage of gross income or of net income? How is net income determined? If you use the old “After Costs” plan, specify exactly what those costs will be, in advance, so that there are no games later. When and how will you be paid? Should tax be added or not?

3. Manage the process. Communicate regularly. Keep in touch. Monitor progress, payments, promises. Make sure everyone is doing what he or she agreed to do. Set up regular, dated and timed meetings, minutes of meetings if necessary, conference calls, and / or e-mails. Maintain the relationship but be businesslike and strict. Always be prepared to walk away from JV partners who do not stick to the agreement.

4. Look for ways to enhance your JV – can you add additional income streams, improve on the process, change the system for the better, or bring in more partners? A JV is a dynamic process. Be flexible and open-minded.

5. When you encounter dishonest JV partners, burn your bridges. Walk away and warn your friends. If the defaulting partner is a Member of the JV Forum and did not abide by our Code of Ethics, let me know.

By nurturing, managing, and monitoring a Joint Venture, you establish strong relationships and optimize the potential of the JV itself. As the JV develops, the integrity and professionalism, or lack of it, of all the partners will be revealed. Joint Ventures are the ideal business opportunity and you should always remove cost and risk and minimize the time invested.

Attend our next Joint Venture Broker Bootcamp and join the DollarMakers Joint Venture Forum – Click here now.

Robin J. Elliott www.dollarmakers.com