Running a business is extremely challenging to do on your own. Even successful, established companies take advantage of joint ventures to advance their goals.
Instead of being limited by your resources, joint ventures give you the flexibility to take action on the projects that will move your business forward. Check out the following 8 different types of joint ventures in business:
1. Basic Joint Ventures
Joint ventures can be a valuable tool for business owners in any industry. Creating a win-win situation with another company can help increase your longevity and raise your bottom line. Starting a joint venture is a worthwhile endeavor for new business owners looking to get started and existing business owners looking to take their company to the next level.
Different types of joint ventures can give you access to new markets, distribute the risk between you and another business, and give you access to greater resources which you can use to achieve your goals.
2. Affiliate Partnership
Affiliate partnerships are an example of a joint venture agreement with a low barrier of entry. Creating affiliate relationships is a good idea for product owners who lack an audience. A huge part of the internet marketing industry based on long lasting affiliate relationships. You can think of affiliates as basically commission only salespeople for your company. Affiliates have the marketing and promotion skills to expose your product to an audience that’s ready to buy.
3. Financing Agreement
A financing agreement is a type of joint venture agreement that involves taking on a bit more risk. Getting funding from a private party or business center will allow you to execute the business plan that you may have lacked the resources for at first. For these types of joint venture, it’s best to hire a business lawyer to ensure your legal rights are properly protected.
With a financing agreement, both parties share the risk. Joint venture financing gives the business owner more flexibility to execute new ideas and implement new strategies. Examples of a financing agreement can include providing a lump sum of cash, purchasing building space for the business, or equipping the business owner with the ability to hire staff.
4. Vertical Joint Venture
Vertical joint ventures are incredibly useful tools when you’re dealing with importing products. This type of joint venture allows businesses to enter new markets while sharing risk and building economies of scale. By sharing distribution channels, industry knowledge, and funding, both companies can work towards finding more effective ways to reach their goals.
5. Project Based Joint Venture
Project-based joint ventures usually have a singular focus and goal. It’s common for businesses in emerging fields to collaborate with each other in order to further their research. If one company wants to expand into another industry, they can collaborate with an existing company in that industry to get the valuable data they need to build a successful business.
Both companies can use the research and data to advance their existing operations. Project-based joint venture efforts usually don’t go past the agreed upon task. But the results are valuable enough for both companies to benefit.
One of the most futuristic types of joint venture you can enter into has to be collaborating through application programming interfaces. With publicly available application programming interfaces (APIs), companies can collaborate by combining software unique to each business.
API collaborations in the business world are usually used to enhance an existing product or service through new technology or unique data. Many Software as a Service companies start from API collaborations between two technology companies. This is a great type of joint venture for young technology companies looking to enhance their intellectual property.
7. Republishing & Retargeting
Republishing and retargeting are powerful joint venture techniques for companies that rely on technology. With republishing, you can use existing content to tap into a new audience. The content owners benefit from brand exposure and traffic, while the publishers benefit from having new content to keep their audience consistently engaged.
Retargeting sharing is a powerful technique for businesses in similar or related industries. If you and another business have some overlap in your audience, you can benefit from advertising another business on your retargeting list if they do the same for you. This is an excellent way to put all the data you have collected from paid ads to work.
8. Functional Based Joint Venture
With a functional based joint venture, two companies come together to combine their expertise. The goal of this type of joint venture is to enable both companies to perform their vital functions more efficiently. Functional based joint ventures occur all the time in the food and health industry.
One company may have the resources to manufacture a supplement or type of food but lack the resources to effectively promote and sell the product. Two companies can come together and mutually benefit each other by filling gaps the companies previously had when working on their own.