Joint ventures are a great way to utilize another entrepreneur to reach a common goal or provide mutual benefits.
Here are our top tips for tour and activity operators looking to establish a joint venture.
Establish the why behind your joint venture
There needs to be an obvious benefit in partnering together so that it’s worth the time and effort you’ll both be putting into it.
There are an array of different types of tourism operators – accommodation providers, shuttle and transport operators, and of course tours and activities. It’s likely that there will be more than one business partner involved.
For example – if you offer walking tours, you can partner with an abseiling operator in the region, a a local zoo, a small hotel, and a shuttle service.
Some of the key benefits both parties experience:
- Shared expenses.
- Shared resources.
- Access to new regions and markets.
- Reduced financial risk.
You will be able to offer a more attractive itinerary by combining your resources and expertise, instead of trying to build it all yourself.
Adequately vet your business partner(s)
Everyone involved needs to be on the same page for your joint venture to work.
Do a background check and ask yourself:
- Are we working towards similar goals?
- Have they been in a JV before? If so, did it work out?
- Is there an immediate opportunity to be extremely profitable? Is it worth my time?
- Is this a good long term strategy? Will it hold up in 3-5 years?
- Do they have a positive reputation in their dealings with customers, employees, and associates?
You and your partners need to be in it for the long haul, so it’s important to take your time with decisions like these.
Put it all in writing
Start off your joined venture on the right foot. Before any work takes place, formalise your partnership with a contract. Key elements of your contract include:
- What your objectives are, and how you will measure their success.
- What each party will contribute, financially and in the way of resources.
- How liabilities, profits and loss will be split.
- How you will make big decisions.
- How you will handle disputes.
- How parties can exit the venture.
You should definitely get professional advice from a lawyer, accountant, and financial broker before you finalise any agreement involving funds.
Nurture the relationship
Like any relationship, its success requires a consistent investment of your time and effort. Some items that should be on your checklist:
- Scheduled face to face meetings.
- Have lunch or coffee.
- Regular email and phone communication.
- Openly sharing information on financial matters.
Show your commitment to the success of your joint venture by making your partners feel important.
Getting A Meeting – when you’re having a little trouble connecting.
- Call Ahead and talk to an employee.
- Ask when the business owner or manager will be in.
- Ask what the business owner or manager’s favorite snack or drink is.
- Show up at the time when the business owner or manager will be in with their favorite snack or drink. They’ll at least talk to you long enough to enjoy their snack or drink you bought and hear out your idea.
- If they had to run out when you stop by. Leave their snack or drink with a note.
- If at first you don’t succeed, try, try again.
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