The business world is going through a major shift right now.
For many, business is very slow indeed. Some businesses may find themselves unable to work the way they normally do because of the lockdown.
But if you can’t work in your business—work on your business.
As more and more people are able to connect using video conferencing technology and other communication apps, this is the perfect time to build relationships.
One great relationship to cultivate right now is a joint venture partnership.
A joint venture, or JV, refers to any situation where two parties engage in a commercial enterprise together while retaining their individual identities and businesses. A common example is giving referrals in exchange for some amount of affiliate income.
Seems simple enough, right?
Unfortunately, a lot of small-business owners are going about joint ventures the wrong way. And this can significantly limit how effective those relationships are—and how much profit they can bring in.
The mistake you’re probably making:
Here’s an example of the typical way most joint ventures work: “I’ll send you a referral, and you send me 10% of whatever you make from that referral.”
This quid-pro-quo is how most small businesses are thinking about joint ventures.
Typically, a small-business owner will look for potential partners who solve different kinds of problems for a similar client base. For example, one of my clients is an interior designer. Homeowners who hire her are probably also looking to hire a contractor to complete her designs.
If she went about it the usual way, she would partner with a contractor or two and send the homeowner to them to get bids. Then the homeowner would pick one and that would be the end of it. Perhaps one or both of the contractors would send referrals to the interior designer, and maybe there would be some money that changes hands in exchange.
And that would work.
But there’s a much more powerful way to connect with referral partners that has the potential to bring in a lot more clients.
Do this instead:
Think about the problems that your referral partners have when they work with your common clients.
What are the hot button issues for these potential partners? What are their concerns? And how can you or your offerings help alleviate those pain points?
My interior designer client noticed that contractors really don’t like working with clients who constantly change their mind. When clients can’t make a decision, it usually results in lots of change orders for the contractor. It can really impact the schedule and it’s a huge hassle.
When setting up their referral relationship, then, this interior designer stresses to the contractor that she will help them deal with those client issues. She explains how she’s not just a designer—she’s a project manager, too.
She doesn’t just throw her design and the clients at the contractor saying, “it’s your problem now.” Instead, she stays with the project from start to finish—and even helps coordinate deliveries of hard goods like cabinets and appliances. She takes care of all the things that distract the contractor from doing what he’s there to do.
By emphasizing these aspects of her work as an interior designer, she helps contractors understand how she can solve their problems.
As a result, her JV contractors are much more likely to send clients her way.
Here’s another example:
As a business coach, accountants are a great resource for me. One of the biggest problems they have is when their clients come to visit them in March with an overflowing box of receipts and invoices and expect them to solve their tax issues in two weeks.
I help my CPA partners by guaranteeing that the clients they send to me will come to see them at least two to four times per year, if not more. This way, they get an opportunity to work with clients throughout the year, instead of dealing with a mad scramble to get things done during tax season. The CPA can finally move from being a bookkeeper and on-demand tax preparer, to building a valued relationship with that client.
Ask not what your partners can do for you, but what you can do for your partners.
When you set up a joint venture, don’t just think about how you and your JV partner can solve your mutual clients’ problems. While that can be a useful first step in finding a good referral partner, it is not the only ingredient in cultivating a fruitful relationship.
In addition to solving your customers’ problems, think about how you can solve your JV partner’s problems—especially the problems that arise when they work with your mutual clients. If you don’t know, perhaps that can be a topic of conversation at your next (virtual) coffee meeting.
When you emphasize how you can make their work easier, smoother, or more profitable, they will be even more motivated to send their clients to you.
It’s the very definition of “win-win.”