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Alliances & Collaboration

When it comes to doing business online, it is only a matter of time before you start to seek out and build relationships with, others with whom to joint venture.

With the right joint venture partners in place, you really can ensure your success. The trick is how to find the right ones, and then once found, how to negotiate a deal that works.

Because the single biggest problem in the joint venturing process is often negotiating the revenue share.

Think about it. If everything else is set up well - including the offer itself, the promotional copy, the schedule of the announcement, and even the follow-through calls, etc. - if you haven't properly broached the topic of how the money will be shared, the potential for a falling out is big.

You know it to be true, I'm sure. Even when it comes to talking about specifics of money with your significant other, things can get heated fast.

So what's an easy way for you to be able to talk about money to a near-stranger? A way that takes the emotions and sensitivity out of the picture for both of you, and reliable allow you to come to a happy agreement?

Let me share with you a method I've used over the years.

I'll give you an example first and then extrapolate to the principles so you can adapt the example to any specific situation.

Let's say I have a 3-week TeleClass program that I'd like my new joint venture partner Jim to announce to his list. Here is how the conversation might go.

Andrea: 'So Jim, I'd like to talk about how we'd share the revenue we earn when you promote this program for me next month. Is this a good time for you?'

Jim: 'Sure!'

Andrea: 'Great. So let me tell you what I was thinking, and you can see what you think. I'm totally open to adjusting and so on, but thought it would be a good idea to start somewhere...'

Jim: 'Sounds fine to me.'

Andrea: 'Okay, so first I wanted to break down the joint venture into elements. The way I see it, there are four main pieces we're dealing with: The content of the program itself; the delivery of the classes; the marketing of the program and then finally the administrative pieces, like customer service inquiries, the shopping cart setup, setting up the web page, and a little bit of writing the copy for the promotion. Oh and yes, I include credit card charges and so on in the administrative part. Does that seem to make sense?'

Jim: 'Yes.'

Andrea: 'Can you think of any other elements that aren't covered by those four?'

Jim: 'No, I can't, but I might later.'

Andrea: 'Okay, sure. When something comes up, just holler and we can insert that element into the calculations then, sound good?'

Jim: 'Sounds good.'

Andrea: 'So based on those four elements, what made sense to me was to set aside 10% of the gross revenue to cover administrative costs. So that's 3-4% for the credit card processing and shopping cart costs. And then about 5% just to cover costs of my Virtual Assistant to help out with inquiries, customer service, etc.

And then, for the remaining 90% it seemed simple and reasonable to split that into three, giving the content, delivery and marketing equal weight. So that means allocating the revenue so that...

The Content of the program gets 30%...

The Delivery of the program gets 30%...

And then the Marketing of the program gets the final 30%.

Because each of these three pieces is essential to our success.

What do you think?'

Jim: 'It sounds good to me!'

Andrea: 'Cool! So based on that then I figured we'd split up what we each bring to the table and from there we can come up with the actual split of the money. So...

For Content, I'll be using our materials, so that category goes to me... 30%...

For Delivery, since there are 3 classes, and Jim you will be leading one of them as guest...let's give you 10% and me 20% for delivery...

Then for Marketing, you and I will both be marketing this one to our databases, so I think it's only fair to have us split this element...so 15% to you and 15% to me.

And of course I don't want to have you have to manage the administration, so we'll take care of that and associate costs here...10%...

So let's see, this works out to 25% going to you, and 75% to me. What do you think?'

Jim: 'Well...I think it sounds great. The only thing I think I'd comment on is that my database is much bigger than yours. So I think the marketing might want to be adjusted to reflect that.'

Andrea: 'That's a good point. Your database is actually almost twice as big as mine. Hmm. Well, would you be willing to commit to sending out at least 2 solo emails to your database before the deadline we set? Because if that's the case, I would be happy to split the marketing say 20%-10%...so you get twice as much as me in that category.'

Jim: 'Sounds good. Yes, I'll send out one email announcing the program, and then a second email reminding them to sign up. So does that make the final split 70%-30%?'

Andrea: 'Yep. So because the program is $100 per person, you'll earn $30 for each person that signs up. We have 100 slots, and if you fill even 50 of those slots, that's $1500. I'll be able to write that check or paypal you that amount, at the end of the month...does that work?'

Jim: 'Yes, that's good. I'd like it by check to avoid the paypal costs. And then afterwards, are you going to be selling the recording? I'd love to sell that too, on and ongoing basis at the same rate...'

Andrea: 'That sounds awesome. Okay! So I'll just type up a quickie email note to reflect this, and then get back to you with the promotional copy and so on that you can adapt for the initial announcement. Thanks so much Jim, I'm really excited about providing terrific value to your readers.'

Jim: 'Good stuff. Next time let's chat about a new launch I'm planning...we can do this again.'

Andrea: 'Bye for now Jim.'

Jim: 'Bye.'

-------------end example conversation-------------------

And now here are a few of the major principles extrapolated, so you can apply them to your next joint venture conversation about money.

(1) There are four 'categories' or 'elements' in the above sample conversation. These are variable according to your needs. So for example, if your joint project involves programming, equipment rental, or something else, add elements to the list and divide your 30, 30, 30 and 10 accordingly.

As you do so, remember you are assigning a relative 'weight' of importance to each element.

(2) Sometimes you may joint venture with someone you are willing to 'lose' money on. For example, if Oprah Winfrey were to call and say 'I'd like to announce your 3-week TeleSeminar Andrea,' I would do the above calculation for my own benefit, and then, knowing those numbers, say 'Awesome, Oprah, I'd be happy to send you 90% of all revenue, keeping just 10% for my own costs.'

You might be willing to give her 100%. And in fact, that's probably not a bad business decision.

The point being however that you yourself understand the breakdown behind the scenes, and therefore know what you are investing into the agreement. This is the only way you can consciously acknowledge 'why' the relationship benefits you. Oprah announcing my TeleSeminar would bring me so much benefit that I'm willing to 'lose' money on the initial step. (Unlikely as it is that Oprah's doing it for the money I would send her in any case!)

(3) Sometimes your joint venture project may involve one-time costs up front. For example, you may decide to co-author a Multimedia Workbook. Such a project requires an investment in graphic design for the cover, manufacturing the CDs or DVDs, etc.

What I suggest you do is negotiate these one time costs separately. Usually an easy way to go about it is calculate according to the above sample dialogue, and then add one thing: 'So once our initial $1500 in graphic and multimedia costs are covered by the first sales, we'll begin splitting the revenue 30/70.'

And that is a very simple, robust method that you can use to frame your discussions about splitting the money.

The thing to remember here is that this is a scalable, flexible model. Use it for it's key benefits which are, by way of review:

- To facilitate a straightforward conversation about money.
- To take the emotion out of the equation.
- To get buy-in from the joint venture partner as to the 'logic' behind the decisions at each step of the way.

A final note:

Often times as you become well-known in your niche market, you will begin to be approached to speak, or present, or teach classes for others. These others, not knowing this method, or being very clear about how to negotiate a revenue share, will often throw out a number that they 'always' use, that actually does you a disservice.

The potential partner may even say things like, 'Well, so-and-so has been teaching his program with us for this long, and he's always taken 20%.'

Instead of simply bowing to this number, I invite you to try a conversation like the above, and see where you can get. When presented with a rationale in this way, most of the time the numbers start to make more sense and reflect the real value you bring to the table...

Because at heart, that's what the 'Sharing the Money' conversation is about, in my opinion...coming to 'S-E-E' clearly, where your value lies in any given situation. And making sure you leave the negotiating table with a share of the money that feels right and sits right to you and your accountant at month end.

So go forth and negotiate! As you practice this conversation you will become more at ease with it, and may even surprise yourself at how sophisticated a money-related conversation you can handle with peace of mind. As you pursue Multiple Streams of Income...that is, after all, the goal.