Friday, July 02, 2010

How To Be A Joint Venture Broker

by: Nick James

So far in my joint venture articles I've been working on the basis that you have (or soon will have) a product (or service) to sell. And you're using joint venturing as a way of linking up with a partner .... to make a few thousand (or maybe millions!) of pounds from selling it to their customers. Because that's the usual way JVing works. But it doesn't have to be like that.

You can make a ton of money from joint venturing even if you do not have a product or service of your own. In fact, it can be an even easier way of doing it, and you can make a lot more from it too!

How? By becoming a joint venture broker!

As a JV broker, putting these deals together for others, you will be partnering up businesses who may never have heard of each other before - getting them together in a JV deal and making money for both of them - while taking a nice cut of the profits for yourself too!

To operate as a JV broker you don't need anything more than you need to set up direct JV deals. If you have a PC, a phone and, perhaps, a set of phone books then you too can set up great brokered JV deals!

In the simplest terms, here is how Joint Venture brokering works:

1. Choose a JV product or service area that you would like to work in.

2. Research potential partners in exactly the same way as you normally would. I've covered this in several of my articles.

3. Do some checking to try and ensure you do not bring the wrong companies (such as direct competitors and obviously unsuitable partners) together!

4. Contact your prospects with a JV proposal. The only difference is that this time you need to send proposals to two parties instead of just one. Again, I've covered how to do this in several articles.

5. Spend some time educating your prospects on how participating in joint ventures is going to benefit them. Remember, they may not have seen a JV before.

6. Lastly, bring the partners together and sign the deal.

You can see that the steps are more or less the same as when putting together a deal in which you are one of the parties. Except that this time there are three parties not two with you acting as the man (or woman) in the middle.

What percentage of the profits should you take as a joint venture broker?

This is one of the most important aspects of being a broker. It depends on a few things:

* How much you want or need to make on each deal.

* How much of the profits the prospective partners are willing and able to pay you.

* How much work you do - if any.

* How fair - or ruthless - you want to be!

As a ball park figure, the standard brokerage commission is 10%. If this doesn't sound much remember that, if a typical JV deal makes £10,000 profit, then as a broker on 10% commission you would make £1,000. And remember, this is just for introducing the two parties. You don't have to do any of the work in marketing or fulfillment at all. If you were involved in just two deals a week you would still clear over £100,000 a year. And there would still be time to do direct JV deals of your own as well. Of course, if you do more work - such as helping with marketing etc. - you could make even more, perhaps up to 40% commission. Which would be £4,000 on a £10,000 profit .... well over £400,000 a year assuming two deals a week!

And it gets better. Normally with a brokered deal you would just charge one of the partners a commission - usually the one with the product or service to sell. But there is nothing to say that you can't negotiate a commission from both of the parties. You don't need to take the same cut from each partner here. You can charge each partner more or less depending on how keen they are to do the deal. And if you do more work for one partner than the other you would obviously want to take a higher percentage from that partner. Some deals will produce more than others. But the point is there is no easier way to make money than as a JV broker.

One last important thing here: Be sure that you don't share any of your JV ideas with any potential prospects before they sign a non disclosure agreement. Apart from ensuring that important commercial secrets don't get into the wrong hands it means that each partner won't be tempted to cut you out of the deal if they find out who the other partner is, but before the deal is signed. Most partners will be more than happy to do this, given the amount of money they stand to make. (I'll run through non disclosure agreements in another article.)

Once you become familiar with this process you can repeat it over and over again in more and more profitable JV brokering deals. In fact, once you build a reputation as a JV broker who can create profitable deals you should find that many businesses will actually come to you and ask you to find partners for them!

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