Patrick Giesbrecht’s posterous

Joint Ventures in business 



May 7, 2009

You Should Talk to... This is how to do a Joint Venture!

I'm back again with another Joint Venture tip. KEEP IT SIMPLE!
 
I've talked about focussing on the other person's needs and that is ultimately the most important part of putting together a good, sustainable Joint Venture. One of the most common mistakes budding JV brokers make is to complicate things by being too involved in the deal. Here are the 4 steps to set up a Joint Venture:
 
1. What do you need?
2. What do I get? (From the party making the sale)
3. You should talk to.......
4. Get paid.
 
Once a deal is set up and tested, a simple referral is all you should need to do to make money. Don't fill any orders; don't sell or close the client. If your refer correctly, the sale is made. You just need to get out of the way.
 
Now, to really make this JV crank out some money, get someone else referring clients that need your partners services to you.
 
For example; lets say your JV partner sells home security systems. You can get a handful of realtors and mortgage brokers referring you business. To begin with you may want the leads flowing through you when the JV is new; but after things are working smoothly, with the realtors sharing with you in the commissions from the security company you can step out of the way completely and just get paid for all resulting business. Then you can go out and set up more referral systems to further increase your business.
 
If you think this won't work; think again. I do this on a regular basis. If you are working with the right people; this is a slam-dunk. The simpler you keep the deal the more of these you can participate in, because they take very little management once they are running.
 
Thanks for reading this. If you like this blog, subscribe to it and I will send you a F*ree E-book on how to make money using Joint Ventures.
 
Go forth and Joint Venture!!!
 
Patrick Giesbrecht
Joint venture Broker
www.jointventuresunlimited.com

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May 6, 2009

Solving versus Selling- Asking the Right Questions- This is what Joint Venture Brokers do!

Today I met with a very successful business owner. He immigrated to this country as a young child; worked for my uncle shovelling chicken manure as a teenager (I digress) and today owns or is a managing shareholder in 40 businesses! (An amazing story that I may talk more about at some point.)
 
Back to my story. I knew what I wanted when I went to meet him. I was hoping he would have a business or two that would fit the profile that I work with. After doing the typical "getting back in touch- what have you been up to" sort of talk, I asked him about his businesses. Then I told him what I was interested in. It became evident pretty quickly that my services would not be a fit with his existing businesses.
 
For a lot of us (and me, in times past) this would have been the end of the discussion and we would have shook hands and I would have left to look for other prospects. Because I am a Joint Venture Broker, however, I now have a sharply different strategy. I asked him the question that more sales people need to ask their prospects:
 
"So what is it you need, or are looking for right now?" Now some of you are saying, "I ask my prospects that from time to time; hoping to uncover a reason to convince him/her to buy my product" What I am referring to has NOTHING to do with hoping he will buy my product or service. As a broker I solve problems; not sell things that my prospect is not sure whether he needs or wants.
 
My friend told me in clear, articulate terms EXACTLY what he was looking for; and guess what? I don't have what he wants!! So what do I do? As a broker I reach out to my network (people like you) and find someone who has what he needs. If you are trying to sell or get rid of what he needs I have now just solved your problem AND my friend has what he wants. I make a profit for bringing value to both parties. Everyone wins; everyone is happy.
 
If you are involved in the traditional sales process, you can do this too. Imagine if you are meeting 10 prospects per day and 2 are buying from you. What if you were able to solve a problem for 2 of the other 8 prospects by referring them to another professional and getting paid for the referral? Depending on the commission structure this strategy could double your profit easily; not to mention endear you to more of your prospects, leading to more referrals. (Some of you are doing this already, but you're not getting paid. If you are bringing value, you should get rewarded in some way.)
 
People want their pain taken away; not to be sold on something they don't really want or need.
 
In closing; I want to send you off with my patented salutation: Go Forth and Joint Venture!!
 
Patrick Giesbrecht
Joint Venture Broker
www.jointventuresunlimited.com

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May 5, 2009

The Lifetime Value of a Client (Most Business Owners Don't Know What That Number Is!!)

Okay, I’m finally going to get to this topic! Most business owners have no idea what that number is for them. To be fair, it can be all over the map for some businesses; but your typical service or retail business can figure this out very quickly; if they have the necessary data. So the formula looks like this:

V=ABC+(ABCX) Here is a work sheet I used in one of my past business’s to determine what my clients could justify spending on getting a new client.

Value of a New SATISFIED Client

V= True life-time VALUE of a new client

A= Average price of each sale

B= Number of sales per customer per year

C= Average number of years a satisfied client remains a client

X= Average number of referrals per year from a satisfied client

For example:

A= Average sale = $10

B= Number of sales per client Per year = 24

C= Average number of years they remain client = 5

X= Average number of referrals per year = 5

Formula: V= ABC + (ABCX)

V= $10x24x5 + ($10x24x5x5)

V= $1200 + $6000

Value = $7200

So we can see from this exercise that a client who brings in just $10 margin, twice a month is worth $7200 once you factor in his referrals. Let’s use the example of the restaurant again. Wouldn’t it make sense to pay me an on-going commission on the one person I send you when you consider the value my referral brings you with HIS referrals? (And you don’t pay me for that) There is unlimited potential in your business when you start looking at incremental profit; and the lifetime value of one of your clients.

Another way to pose the question is; how much would you be prepared to pay for your typical client if, instead of spending money on traditional advertising, you could walk into a store and buy guaranteed clients off of a shelf? First of all, there is no risk. Secondly you are only paying for results. Obviously, it makes sense that you could pay generously if you are only paying for results. Smart business people know that $1 invested with a guaranteed return of $1.50 is a GREAT deal. But many business owners literally, throw money at traditional advertising with no guarantees of any kind.

The answer, my friends, is Joint Ventures!

If you like this blog, subscribe to it and I will send you a Free E-Book on how to dramatically increase the profit in your business.

Patrick Giesbrecht

Joint venture Broker

www.jointventuresunlimited.com

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May 4, 2009

What is Incremental Profit?? Why do most business owners NOT get this? (The smart ones do)

I want to talk about the lifetime value of your typical client. But first a word on incremental profit: Let's suppose you owned a restaurant and you ran with an average of 40% of your tables empty. How much more does it cost you to serve guests in those otherwise empty tables? Your lease did not increase; the lights were already on; and the whole restaurant is already being heated/air conditioned. The true cost is the restaurant's food-cost percentage; which typically runs around 32%. That means that on any extra tables you fill with patrons you are making just under 70% profit! Now, if I offered to bring you extra business that you would not otherwise have had would you pay me an on-going commission of 20% of the bill? It would make good sense to do that wouldn't it? You are still left with just under 50%!
 
Do you know what most restaurant owners would tell you if you posed them just such a question? "No! I can't afford to pay you that much!" This is because most business owners do not understand perishable resources (the restaurant's empty seats) and incremental profit.
 
When you consider that happy diners refer their friends (and you're not paying me a commission on those) wouldn't it make sense to give me a vested interest in promoting your business? How about if you gave me a "Free Dessert with Dinner" voucher and I took it along to a local singles club. I offered the leader of the club 50 of these for all of his members on their next outing. My agreement with you would be that you paid me no commission on the first visit; but 20% on any other time the club came back to eat there.
 
That is another example of how a Joint Venture Broker brings value and gets paid a percentage on increased business. (How many singles clubs and restaurants with empty seats are there in Vancouver?)
 
I am always looking for great people to put together Joint Ventures with. Send me a message if you want to talk more about this. Next blog I promise I will talk about the lifetime value of your client! Talk to you then.

Patrick Giesbrecht

Joint Venture Broker

www.jointventuresunlimited.com

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May 3, 2009

Why Pay On-going Commissions??

This is a question I have been asked from time to time. It is also a point that really seperates cheap, greedy people from true business people. I practice what I preach. If you bring me business I will pay an agreed to commission for the life of the client. Here's why. I want to build strong, strategic relationships with people who will have a vested interest in my business over the long-term. I want them making money off of me on a regular basis. Not all, but most people know a good thing when they see it. If I am sending you a cheque every month for $1000 from a client that you sent me, what are you going to do? You're going to figure out how to send me another one!! And if the $1000 suddenly stops because the client went elsewhere; you are going to notice and figure out how to bring him/her back to me or find me another client.
 
With-in DollarMakers, a Joint Venture Broker club I belong to, we teach our members to find and build on-going overlap with other quality people's businesses. If you can get strong overlap with 10 other businesses; and they are all promoting you to their databases, for example, you will do very well, regardless of the economic times.
 
Now, cheap people think; how can I get out of paying commissions more than once? (By the way, being cheap, and greedy go hand in hand, if you think about it!) This is very short-sighted. This is the difference between hiring a sales person to create one sale; and setting up a system that brings in business again and again.
 
Next post I will talk about incremental business and the lifetime value of a client. Both of which will show you how being generous will make you very rich! 
 
 
Patrick Giesbrecht
Joint Venture Broker
www.jointventuresunlimited.com

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May 3, 2009

This is my first blog entry using Posterous.com. If this works as well as they say it will; then giddy-up!

Some of you know that I am a joint Venture Broker. Almost everybody says; “What is that?” A Joint Venture Broker links solutions to problems and markets to businesses; and then gets paid a percentage of business that happens as a result of the connection. For example; I met a good contact who needed the services of a printer that I had been doing business with for some time. Now, the potential client was out of province and no relationship existed at that point. This really was business the printer would never have gotten without the introduction. My printer contact was happy to pay me an on-going commission on any business they did for the life of the business relationship because they saw this as incremental business.

In another post I will talk about why people are smart to pay on-going commissions; as opposed to a one-off finder’s fee. (Smart businesses get this, by the way, but most small and medium-sized business don’t)

For today; take a long look at your business and look for ways you could incentivize other people to become passionate fans of your business and promote you where ever they go. Talk to you soon!

Patrick Giesbrecht

Pacific North Marketing Ltd.

2nd Vice-President Abbotsford Chamber of Commerce

DollarMakers- Canadian Systems Director

www.jointventuresunlimited.com

p. 604-557-1227

f.  604-557-1232

 

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