Before approaching a potential partner, you need to prepare an offer. You have already decided what business goals a JV can help you achieve, and which type of partnership you will be pursuing. The next step is preparing a proposal that is a win/win situation for both parties. To do this, create an outline of proposed elements of the joint venture before contacting a potential partner. Here are a few considerations to include in your proposal outline that are common to small business, entrepreneurial JVs.

Online Affiliate Relationships

In an affiliate co-op agreement, your first instinct may be to seek a 50/50 commission split. However, you should reconsider this. Take a look at the resources each side is bringing to the table. It is not uncommon for an information product developer to offer a 75% or even 100% commission in a JV partnership. On the other hand, physical product or recurring payment memberships usually offer a much smaller commission, sometimes as low as 5 to 10%.

It all depends on the goal you are trying to achieve and the standard in your marketplace. If you are a newbie in your marketplace, and building your presence in your field while creating an email list of prospects and customers is your goal, offering more than a 50% commission ensures that your new partner will do everything in his or her power to help you reach that goal. That is a very attractive commission rate, and may be what gets your proposal the attention of your potential JV partner.

When approaching an established internet marketer, you have to make your JV “pitch” outstanding. These successful marketers are constantly inundated with business offers. For your proposal to stick out from the crowd, it has to make sense for that business person to give you access to his established prospect pool. If you under-perform, or offer a substandard product or service, the damage to that business owner’s reputation is not worth the risk of a partnership.

Know When to Say No

You should never enter a JV agreement that doesn’t make sense. Some entrepreneurs, anxious to rise above a plateau they have reached, will make agreements and partnerships that are one-sided in the other party’s favor. They are desperate to establish new business connections and build a prospect pool.

In every JV proposal, whether you are making or receiving the pitch, you need to look at the situation in an objective manner. Pretend you’re acting as an arbitrator, seeking a level playing field for both parties. This will allow you to say no when that is the appropriate response, and also allow you to spot opportunities where both parties can profit.

Determine Key Responsibilities

When you are making your JV proposal outline, be as detailed as possible. This is the information you are going to use when you approach a potential partner. Imagine getting the perfect JV partner on the phone and being unable to answer an important question or concern. You can avoid that problem when you determine which party is going to handle the following responsibilities.

• Managing email lists and autoresponder sequences
• Handling affiliate commission payments
• Advertising, promoting, and marketing
• Managing staff
• Handling project finances
• Launching the product, service, or offer
• Offering upsells and down-sells
• Warranty and/or guarantee enforcement in the future
• Ongoing customer service, customer retention, follow-up offers after the sale

Depending on your particular agreement, there may be other important responsibilities you or your partner needs to handle. Don’t rush through this process. Write down every relevant task that will be a part of your JV partnership, and then assign those tasks to either you or your prospective partner. This step makes it easy to see if your JV provides a fair 50/50 split of responsibilities.

Establishing Important JV Proposal Details

The more detailed your work here, the better chance of impressing, and landing, the perfect partner. Consider every detail relevant to the venture you have in mind. Then step away from your work, and revisit it later. You will often-times spot important details you left out of your proposal.

Termination – Don’t forget to include a termination date for your partnership. One veteran JV trick here is to have the termination date attached to goal achievement. Your partnership would then terminate when each party has achieved a desired result.

However, you should still have a backup termination date specified. If both parties do not reach their business goals by this date, the JV agreement is revisited, and terminated if both sides cannot come to an agreement about a logical extension.

Goals – Your goals need to be articulated as specifically as possible. Instead of “build an email list”, a smart goal would be “build an email list of 1,000 new customers in 90 days, by selling my XYZ product through an affiliate partnership with ABC Corporation.”

Look at your overall goal, and work backwards. If raising your gross margin by 30% is a result you’re looking for, how are you going to do this? Will you simply raise the prices of your product going into the JV? You can alternately offer only those products and services with the highest margin of profitability. How many transactions or conversions will you need?

If you are working with a commission split, how many unit sales will get you to your goal? What are the limits of negotiation you are willing to accept? You must know your goals specifically. It is also a good idea to think about what your prospective partner may wish to achieve. This allows you to create an outline that covers every contingency that may arise.

Intellectual property – If you are creating a new product, understanding who owns what is extremely important. In most cases where a simple product or service is created, ownership is 50/50. However, if you and your partner are merging your businesses, or agreeing to an affiliate relationship, who owns what after the joint venture has been terminated?

Conflict settlement – Even with the most agreeable of parties, conflicts can arise. You and your partner can create the most detailed, in-depth JV agreement, and some problem can appear out of nowhere. This can lead to conflicts that could doom your relationship. You need to know if you and your partner can handle disagreements, or if you will agree on a third-party arbitrator.

Performance issues – This part of your proposal outline covers what happens if one party or the other is under-performing. Detailing every responsibility and possibility that is encountered in your partnership is extremely important, should this happen. Performance responsibilities must be agreed upon in detail and in advance, so you know how to handle a lack of performance from one party or the other.

Miscellaneous – What happens if an illness strikes one of the partners? If an accident, loss of a loved one, or similar tragedy occurs, what happens with the partnership? If you decide to sell your business after you have formed a JV partnership, what are your responsibilities, and what can your partner expect? These are just a few miscellaneous situations which need to be considered when forming your JV proposal outline.

Legal considerations – A lot of small business, entrepreneurial JVs are successful when built on nothing more than a handshake. However, for complicated situations, you should always consult an attorney or JV arbitrator for advice.