Testing a Joint Venture Before Full Implementation

Posted by Robin J. Elliott

From experience, we know that many people promise big, but can’t always deliver what they promise, for various reasons. (“Big hat, no cattle.”) One of the reasons for this could be that they don’t believe they will get a very large response, and they simply don’t have the capacity to fulfill large orders or deliver the service. Or their circumstances, cash flow, staffing, or supplier situation might change and put them in a position where they can’t deliver. Or you might find that their service stinks or they’re always late… Whatever the reason, it is wise to test a JV in a small way before running it out in a big way.

One of the ways to avoid disappointment is to avoid people who are desperate for business or have cash flow problems, especially web “masters”. You might find they’re so desperate for money that they make existing clients wait and stew while they grab all the business they can get to pay the rent and ultimately disappoint everyone by being late, making excuses, and contaminating your reputation with the customers you sent to them. They’re usually smooth talkers and very good at making elaborate promises. Check their capacity out, talk with past clients, and talk with present clients. Look for red flags. Give them small jobs to do over a period of time, and see how fast they react and how many excuses they make.

When you’re waiting for a commission check from a JV partner and it’s always “in the mail”, remember that FedEx and bank drafts will clear up all “misunderstandings” very fast. “Cancel the check and send me a bank draft with overnight courier and I’ll believe you.” Watch Pacino in the old movie, “Midnight Run”. Money is the ultimate proof, and a very emotional issue for most people. Test in a small way before selling the farm. If he can’t pay for seven chickens and a donkey, don’t expect him to buy the entire farm. Excuses are usually the tip of the proverbial iceberg.

Testing a JV in small ways also helps you iron out any potential misunderstandings and glitches before they become big issues. Most Joint Venture problems are the result of misunderstandings, honest mistakes, and miscommunication. That’s why it is important to get everything in writing, play the Devil’s Advocate and “What if?” games, and remain realistic. Past performance is usually a good predictor of future choices. Often, people promise big to impress you, or they’re embarrassed to admit that they have problems or are facing threats.

Your JV partner’s problems and limitations can become your problems and limitations if your reputation is at stake. Avoid start-ups, dicey investments, and new inventions. Work on the relationship and the trust before you do a JV with someone. At the end of every Bootcamp I present, I have characters approaching me to hard sell me their services or schemes, and I am amazed that they don’t understand that you have to “earn the right” and build the trust before assuming anyone would want to work with you on a JV.

Trial runs, small tests, little investigations, and watching what someone DOES as opposed to what he SAYS before opening the floodgates will protect your JV’s and relationships, your reputation, and your blood pressure. We’re all optimistic, idealistic, trusting, and excited about business, and we like to believe the nest about others, but we need to remain realistic and objective and be patient if we want to be successful in our JV’s.

Robin J. Elliott www.DollarMakers.com