Joint Venture Red Flags

After more than 20 years of doing Joint Ventures, I have learnt that there are a few red flags to look out for:

1. Recently, a friend of mine remarked that person who presented a certain “business opportunity” spoke very fast, and it was a complicated and involved process. That is a definite sign of a scam. Keep them confused and let them feel slightly dumb when they don’t understand the intricacies of the plan. Red Flag – get out fast.

2. When you’re offered shares or a ridiculously high return on investment in some faraway place, gold mine or factory, like in mainland China, or especially in Africa, where the government can easily close the business, nationalize it or simply seize it, or terrorists can simply burn it down or steal it, it’s red flag.

3. When you feel animosity, arrogance, passive or overt aggression, jealousy, or any other negative emotions in the room, it’s red flag. Also when people are overly friendly and gushing, and ESPECIALLY when they start talking about religion or how much they love people, or when they belong to a cult. Even the one that is popular with film stars.

4. Watch out for pyramid schemes, even when they claim there is a product involved. There's often an element of secrecy involved as well. There’s usually a large investment required and your return on investment seems inappropriately high. These schemes usually ultimately collapse, leaving a few very unhappy people in its wake, and few reputations in shreds, along with some lawyers’ letters. Red flag!

5. One-sided deals: when you find that your database is being raped and the other party never intended to reciprocate. Usually, this is evident right at the outset, when the other party does most of the talking and shows very little interest in your product or service. Red flag. Set the deal up so that there are interim checkpoints where you can evaluate the contributions of both JV parties.

6. Internet Anonymity: I know of a 19 year old posing as a JV genius on the Internet. Be careful of people you find on the Internet - they are often not what they seem to be. Can you meet them for coffee or see their house? Can you talk with them on the phone? Are they being endorsed by other Internet ghosts? Red flag.

7. Urgency: pressure usually denotes a scam or financial desperation. "If you don't grab this, someone else will!" OK - let them have it. Red Flag. Don't deal with people who need money.

A Joint Venture should be easy, generous, fair, win/win, flowing, relaxed, and natural. It should be risk free and not take a lot of time or selling. It should not cost you money. It should have great potential.

Robin J Elliott www.DollarMakers.com