How To Double Your Profits With a Joint Venture

How can you double your profits with a joint venture? Just ask Watsco, Inc.! In July of 2009, the company completed a joint venture transaction, and by the end of the year, their 4th quarter net income doubled from the previous year. The earnings information was just released in February 2010 and has sent the company stock soaring.

How Watsco Doubled Earnings

What did Watsco do to provide such a jump in their revenue? The company capitalized upon the demand for more efficient air conditioning and heating in the U.S.

Watsco is a Florida-based company that specializes in the distribution of heating and cooling products and equipment. A joint venture was formed in 2009 with Carrier Corporation, a leading manufacturer of air conditioners and furnaces. The JV was intended to increase the market position and add new product lines.

They succeeded.

How the Joint Venture Worked

Watsco determined that there was a need and potential demand for replacement cooling and heating systems, especially in the Sunbelt region of the U.S. Thanks to U.S. government tax incentives for installing more energy-efficient appliances, homeowners started demanding these products be installed before the tax incentives expired. Watsco heard the call and responded.

The joint venture allowed Watsco to expand their distribution across the country, as well as expand their market base from mainly contractors to general retail outlet stores. It also provided working capital to expand its business and develop new products to fit the needs of the market.

The End Result of the Joint Venture

The result was extraordinary. By operating from 505 stores in 34 states and serving over 50,000 contractor customers with over 4,500 employees, Watsco’s new Carrier Enterprises LLC trumped the competition.

However, the new LLC doesn’t just sell the Carrier brand appliances. Thanks to the Watsco distribution contacts, it also built a strong product line up of premium HVAC products, all of which are built with the latest energy efficient technology.

This synergistic approach to market demand was successful. By taking a keen eye to potential market demand, Watsco’s strategic alliance with the Carrier brand and outlet stores filled a niche. Just in the 3-month period from October to December 2009, the joint venture saw an 82% increase in sales of energy-efficient products. Total Q3 revenue for Watsco increased 68% to $563.6 million and ended with a net profit of $7.1 million. That is a 54% increase of net profits from the same period in 2008!

What You Can Learn from This Case Study?

What can you glean from Watsco’s success? Take heed of their strategy:

• Watch for consumer trends. Markets constantly change as do demand for particular products.

• Find the niche. Watsco saw the potential niche for energy efficient products thanks to consumer demand and government tax incentives.

• Find the right and most strategic partner. Watsco partnered with the popular Carrier brand of heating and cooling products. This helped increase Watsco’s potential distribution channels and increased exposure to other quality brands.

This is a great example of how a joint venture can result in synergistic results. Though you may not have the same profit results, a strategic joint venture can help you capture new markets and see an increase in your sales.

Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.

To discover more Joint Venture Marketing Strategies join his free Joint Venture Marketing Wealth Report.

What You Can Learn About Joint Ventures from eBay and Craigslist

Joint ventures can provide both partners with tremendous success, but even the best intentions can go awry. One example of an off track joint venture involves online marketing giants eBay and Craigslist.

In 2004, eBay and Craigslist entered into an agreement whereby the two companies would try to expand more into global markets. However, the joint venture soon stagnated to the point where eBay was trying to market the 28.5% share in Craigslist to other companies, and Craigslist was fighting to get it back.

The biggest problem with this joint venture is that the two companies obviously had completely different intentions and goals. Craigslist wanted to retain authority and management of its own operations, but learn from eBay about larger online classified operations. eBay wanted to use their share in Craigslist to better compete against Google in the online classified industry and maximize profit potential in Craigslist operations. Although both companies had a shared intention of expanding into bigger global markets, their alternative intentions soiled the relationship, and they are now in litigation to end the JV.

Looking at the original intention of the JV, it was a good one. However, there are things you can learn to prevent such a tragedy from occurring in your own JV. Here are some things to consider:

Write Out the Intention of the JV as a Mission Statement

Before your JV goes “live”, you and your JV partner need to know exactly what is expected from one another. Are you looking to have access to technology while your JV partner needs help in reducing expenses? Or perhaps you both are looking to enter into bigger national markets by combining forces?

The mission is critical to ensuring that you and your JV partner will not have disputes over the overarching goals.

Explicitly Write Out the Partner Responsibilities

What will you be contributing to the JV? What will your JV partner contribute? Who will manage the accounting books? Who will handle distribution?

All of the facets need to be clearly outlined in the beginning. You don’t want to have a finished product ready, but find your JV partner reluctant to distribute it appropriately. Know who is responsible for every step of the joint venture.

Shelter Your Proprietary Information

eBay used confidential Craigslist information and techniques to form its own “free” online classifieds, called Kijiji. Craigslist did not want another competitor, especially one that was using its own technology and industry secrets.

Although you may agree to share certain proprietary information to develop a new product, be careful what information you do share. Keep your proprietary information private. Remember, you are still in business for yourself.

Define the Exit Strategy

eBay and Craigslist are still in a lengthy and expensive dispute on how to dissolve the joint venture partnership. You can avoid legal litigation by defining exactly how your JV will dissolve if things go wrong, as well as if things go right.

Joint ventures don’t have to end badly. Knowing all expectations and responsibilities will help you and your JV partner get the most benefit and profit from your JV efforts.

Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.

To discover more Joint Venture Marketing Strategies join his free Joint Venture Marketing Wealth Report.

Are you spending the right amount of time on the wrong projects in your business

It’s all about minimum input and maximum output.

When I was first starting out on the Internet and as a business owner, I would sit in front of my computer for hours hitting the refresh button after every promotion, website tweak, or SEO hack I implemented. One day it finally hit me. I was spending so much time on activities that only garnished me a small output that I realized my efforts were taking me a long time. Hours and hours, and sometimes days, yet the output that I got from these activities were minimal at best.

I want you to try this exercise.  Take out a piece of paper and draw two lines on that paper dividing one page into three columns. On the left side put the title on the top of the page and call it  “input”.  In the middle column, on the top of the page, label that “category”. On the right side, on the top of the page, put the heading of “output”. Now, on the right side, start listing some of your activities that you do on a daily basis to build your business.  Use this as a brainstorming session. Just write down whatever you do starting tomorrow morning when you get in the office or when you start working from home. You could break your tasks up into a number of categories such as strategy, tactical, operational. For the sake of argument and keeping this article concise and to the point, we’ll label each one of your tasks on the left side with the three categories that we just described. So, for example, if you put down in the left column “modify my meta tags on my blog”, give this a category of tactical in the middle column. If you put down “split test my landing page offer”, this would fall under the category of strategy.  If another one of your tasks is “prepare media Kit”, this would fall under an operational task. Then on the right column, write down what you got out of doing this task. Was it motivational, a desired result, a sale or maybe that activity resulting in no output at all. Whatever it was, just write it down.

By the end of the day, you should have at least 5-10 tasks that you believe are related to building your business that fall under the strategy, tactical, or operational category.

After you do this for just one day from the time you start work until you finish your work, you’re going to be very surprised at the number of activities that you spend time on that do not yield you a high output.

Usually these are tasks that fall under the tactical and operational category. These are certainly important tasks and need to get done, but more than likely, they are not contributing to increasing your profits, or meeting your income goals.

The point of this exercise is to make you aware of what activity you are spending your time on. This will allow you to determine if your current input (your activity) is equating to a high output (your results). I’m not saying do not do these tasks, since they are clearly important to you and your business. What I am saying is to be aware of the time that you’re spending on tasks that should be delegated to a coworker, employee, or virtual assistant so your time can be freed up to work on the strategies that will produce the most tangible outcome in the shortest amount of time.

Why Joint Ventures are Worth Your Time

Most new entrepreneurs and business owners believe that joint ventures are difficult and complicated. In fact, when you think of it, being an entrepreneur itself is difficult and complicated, with all the minute details involved with growing a business. Proposing and forming a joint venture is just one of the many important cogs in the wheel of entrepreneurism.

Joint Ventures: Large Successes

Joint ventures can take many forms. It could be a simple as selling advertising space on a menu, or a complicated agreement to combine capital resources in a high stakes moneymaking venture. An example of a high-tech joint venture is a partnership between the Canadian telecommunications company, Nortel, and the China based Huawei Technologies Co. Ltd.  Both companies are world leaders in networking, networking products, and broadband access. Through their partnership formed in 2006, they planned to expand the potential market by using combined technologies offering innovative broadband solutions.

The partnership between the two global communication giants involved Huawei’s worldwide leading broadband access combined with Nortel’s voice and networking technologies. The combined products provided extra value and enhanced performance to service providers.

Internet service providers around the world were able to deliver an ultra broadband product that included voice, video, data, and wireless services to both businesses and residents using copper, fiber, and fixed wireless networks.

The successful joint venture created new revenue opportunities for Nortel and Huawei and through their combined strengths, both companies gained a larger market share in the ever-growing broadband and Internet services industry.

Using Joint Ventures for Small Businesses

This type of large-scale joint venture example can be used to see how you can gain a larger market share in your community, region, or even nationally by envisioning a combination of strengths with a joint venture partner. Your potential JV partner doesn’t have to operate next door. Look around and research businesses that offer similar products or services as yours in other parts of your state or across the country. When you find one that you feel has strengths that are synergistic with yours, begin the process of brainstorming JV ideas.

Like in the example above, you could combine technologies and resources to form a better and more innovative product. Or perhaps your potential partner manufactures a product that is a good fit with yours and could be sold as a package. You can simply start a joint venture marketing relationship that allows you to contact and market with each other’s existing clients. A good and creative entrepreneur can think of a myriad of ways that a joint venture could succeed.

If you are an entrepreneur who wants to expand your business, then a joint venture option can be a big winner for both you and your potential partner. Remember that entrepreneurship involves being creative and forming new business ideas and promotions. You don’t have to do it all by yourself. Look around. Find a potential partner. Get enthusiastic about your combined business idea. Your efforts in promoting a joint venture are worth your time to expand business and gain new business partners.

Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.

To discover more Joint Venture Marketing Strategies join his free JV Wealth e-zine.

Sales grew from $130k to $1.3 million using a Joint Venture approach

Do Joint Ventures Work? Case Studies Prove Their Effectiveness

Using Joint Venture Marketing to Grow from $130K to $1.3 Million in sales

Entrepreneurs sometimes endure the feeling of having the weight of the world on their shoulders.  A business can encompass an abundance of time with all the details of administration, getting new business, marketing, development, and of course, taxes.  Entrepreneurs are idea people.  They like to create business ideas and watch it become successful.  But sometimes there just isn’t enough time for business development.

That is why a joint venture can be a great option for an entrepreneur to explore new business ideas and expand revenues at the same time.  A joint venture allows an entrepreneur to remain autonomous with his or her business and still enjoy the benefits of a partner sharing expertise and part of the workload.

Roxanne Batson, an entrepreneur and managing partner of two separate small businesses, found out just how forming joint partnerships helped in both the quality of the end-product and increased revenue.

One of her businesses, WomenCorp.org, is an online multi-media women’s magazine.  Roxanne started the magazine as a business newsletter to deliver learning opportunities for women in business.  However, she had to perform all the work herself – researching topics, writing articles, marketing the site, and designing and maintaining the website itself.  The workload was too much for Roxanne, who had other obligations to attend in addition to the newsletter.

Her solution was to open the possibility of a tech savvy joint venture partner who could help with the maintenance and upkeep of the website.  With a great web media specialist as a joint venture partner in hand, Roxanne then found 20 content providers who could do the research and write the continually updated content for the website.

The result was a richer, more dynamic online magazine that attracted more visitors and is more profitable.  Profit is generated by ad sales and shared among the joint venture partners.

Roxanne is also the managing partner for an offline business called Clicker Girls, a business that developed the Classroom Performance System (CPS).  CPS involves the use of a remote response pad technology.  The clicker technology allows students to engage with teachers and receive instant feedback and automated grading during classroom lectures.

Sales of the system were stagnant and Roxanne wanted to find a way to grow the business and increase revenue.  She found the help of DCI, a whiteboard technology dealer.  Their product allows teachers to more easily interact with the students responses through the CPS remote technology.  Through this joint venture, they were able to approach school districts together with their interactive products.  The result?  Sales skyrocketed from $130,000 to $1.3 million!

Making Life Easier and Business More Profitable

Roxanne Batson is a believer in joint ventures.  She says they make life easier, can build a better business model, and she can make far more money than she could alone.  If you are an entrepreneur, consider that your business can have more growth and more revenue if you share ideas and marketing strategies with a joint venture partner.

Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.

To discover more Joint Venture Marketing Strategies join his free JV Wealth e-zine.