Dow Corning. Sony Ericsson. Pottery Barn and Sherwin-Williams. BMW and Louis Vuitton. These are some of the more famous joint ventures and strategic partnerships. Companies pursue joint ventures and partnerships in order to build a revenue stream, but often times these partnerships can come to a screeching halt. Careful advance planning can help avert disappointment and facilitate successful results for both parties.
In this issue of Promotional Consultant Today, we share these insights from author Peter DeHaan as to why joint ventures often go awry.
Hoping for a quick fix. Most collaborations take time to produce results. The belief that you can reach an agreement one day and see results the next is unrealistic and prone to disillusionment. If you pursue a joint venture as a last-ditch effort to save your business, it is likely too late to do any good. It is better to seek these types of innovative strategies while you are in a relatively stable position and have the time to nurture and grow them. The payoff will not be imminent, but when done right, it can be sustainable and long-term.
Not willing to contribute. Too often people enter into partnership arrangements with the erroneous expectation that with little or no effort they will realize great benefits from the work of the partner company. This is selfish and shortsighted. Even if results initially occur, they will not last, as the partner will have no reason to persist in doing all the work while you reap the benefits.
Pursuing a win/lose agenda. Sometimes one or both parties in a business alliance are trapped in a win/lose mentality. They persist in the belief that the only way for them to come out ahead is for their partner to lose. Again, even if this works for the short term, it will not last; the end will most likely be filled with accusation and heartache.
Taking advantage of your partner. Other times joint ventures are sought in order to meet a hidden agenda. Perhaps there is some technology, knowledge, information or expertise that needs to be provided by one party for the project to succeed. The partnership is merely a ruse to quickly and cheaply obtain that desired asset. No one likes to be taken advantage of, and when it occurs, ill will is inevitable and lawsuits are likely.
Inequitable responsibilities and rewards. Arrangements in which one party is consistently expending a greater amount of time and resources while realizing lesser results is one that is destined for collapse. Business alliances that are comprised of givers and takers are doomed from the start.
Lack of agreed-upon objectives and measurements. If you don’t know your target, how will you know if you reach it? Stating that your aim is to increase sales is vague and untenable. Remember that a goal must be specific. It also needs to be quantifiable.
No exit plan. It is unwise to assume that a business alliance will last forever. Things change, and what may have been mutually beneficial could eventually change. Suppose that one company needs to buy equipment, purchase inventory or hire staff for the alliance to continue to function. If there is concern over how much longer the venture will exist, there will certainly be reluctance to make the necessary investments to continue it.
Now that you are aware of the potential pitfalls, read PCT again tomorrow for key strategies to use in building successful partnerships.
Source: Peter DeHaan is a commercial freelance writer who provides content marketing services and also a ghostwriter.
