Much has been said and written about the benefits of a joint venture: more revenue for your business, shared resources, larger and more focused marketing lists. But in your pursuit of a valuable and successful joint venture, there are mistakes that could bring down not only your JV, but your own valuable resources, reputation, and credibility. Here are some of the biggest JV mistakes to avoid.
1. Sharing Private Client Information
Indeed, one of the biggest benefits of a JV is the opportunity to share contact lists and use them to expand client bases. But you should first be sure that your clients or customers are comfortable with allowing their private information to be shared, such as address, phone number, demographic data, and other potentially sensitive information.
This could lead to big problems if a client is disgruntled about receiving unwanted mailings or contacts from a business in which he has no interest. Your own reputation as a trustworthy vendor or service provider could be tarnished.
First, whenever you gather information about your clients, you should always ask whether it is acceptable to share their information with other business alliances or partnerships associated with your business. Always assure them that their information will never be sold. Rather, they should know that they could receive other valuable offers from your business partnerships.
2. Committing to Long Term Without an Exit Strategy
A JV idea may seem great at the time you form it, but ultimately it may not be what the public market needs or wants, or a perceived niche may be saturated. A commitment to a joint venture should always have an exit strategy for any type of negative reaction. This means internally as well. You and your JV partner may find that your work styles are not as compatible as first thought. Or you may simply find that the JV requires too much of your time that could be devoted to your business. Be sure to always have an exit strategy agreeable to both parties.
3. Failing To Check Your JV Partner Thoroughly
One of the worst JV mistakes is to pick a JV partner who ultimately hurts your own business or reputation. For instance, your joint venture partner's products may not be as high quality as you first thought. Your old, current and new clients may wonder why you would endorse such unworthy merchandise and leave your business as a result.
Or in another potentially harmful situation, you find out after forming a JV that your partner is involved in a highly public lawsuit. It might be for bad products, or maybe he was involved in unethical dealings. In any case, your association with such an individual does not a shine a positive light on your business. Be sure to know without a doubt that your potential JV will be a good asset for your clients and customers.
JV formation requires proper due diligence and careful planning - just like any other business strategy. Before you commit to a JV, make sure you are not falling into one of the above mistakes, or expose you and your business to other potentially harmful residual effects. Do the due diligence and your JV will be built on the road to success.