How to Create an Effective Joint Business Plan
For two businesses to form a joint venture, they need a plan that outlines the nature of the business coalition. A joint business plan defines the state of the companies involved, the purpose of the joint business and the partners’ responsibilities.
A joint business plan describes all the activities that these business ventures must carry out to achieve specific goals.
The relationship between the two parties and their goals must be clearly understood. After creating the business plan, it must go through a legal review to test its legitimacy. In your business planning, you work together in a collaborative relationship toward mutually agreed terms.
Business planning for joint ventures helps the parties leverage resources, reduce costs, combine expertise and/or enter foreign markets. A well-defined joint business plan is vital for any agreement and business strategy.
What is a joint business plan?
A joint business plan is a document that defines a merger between two or more companies. It describes the purpose and responsibilities of each partner in the incorporation. You may also see it as a collaborative process of planning where a supplier and retailer agree on both long- and short-term goals, including growth, finances and shared initiatives for profitability.
The purpose of a joint business plan is to design a win-win strategy for increasing consumer sales. This plan allows the partners to build a formidable relationship with retailers for mutual support and benefits. Having agreed upon goals, both parties share insights on a common vision for better support, customer growth, enhanced process and improved sales.
Business planning depends on interested parties sharing their plans with defined mutual growth opportunities. The partners can detail and share strategic planning, growth strategy, tactics and any area of competitive advantage.
The joint business plan is created once a partnership agreement is mutually beneficial and defined. Parties would draw up, approve and sign a formal contract before the execution of the plan. This is followed by a periodic review of joint scorecards based on necessary performance metrics to fine-tune strategies.
The joint business planning process comprises every possible logistic, including human resources planning and how to reach project milestones. Resource accountability is vital to building trust. Your best tool for transparent resource use and accountability is a resource planner .
If the employees of the venture will need to go to a different location, the venture will likely have difficulty planning their tasks and locations. TimeTrack Auto-Scheduling provides joint ventures with a transparent planning tool that reduces effort and enhances error-free shift planning.
TimeTrack Auto-Scheduling
Types of joint business plans
Standard plan.
This is often referred to as the working plan. It offers an overview of the company, outlines its goals, and details when and how entrepreneurs wish to achieve the goals. Such a plan helps secure funds, investments or loans. Within the plan, you could specify how you will use investor funds and their potential profits.
What-if plan
Sometimes things don’t go as planned in business. The what-if business plan defines the various roadblocks that a company might face as it strives to achieve its business objectives. The venture is largely at the whims of external factors, including the supply chain and stock market. You need to outline a predictable scenario to let business partners know how to recover their funds.
One-page plan
While a detailed plan is vital, there are instances where you will need to provide an abridged version of your plan. This one-page business plan outlines the summary of demand, solution, model, management team and action plan.
Start-up plan
A business plan for entrepreneurs, especially those in the early stages of their business planning, will need a start-up business plan. It is designed to give potential investors the bigger picture and outline how you want to achieve your goals. It often includes an executive summary, background, product and service descriptions, market analysis, costs and financial projections.
Expansion plan
This is a business plan that’s necessary when you need to scale your business and identify the necessary resources for its development. These could be financial investment, an additional workforce, new products or raw materials. This plan will detail the business background, needed resources and how they will contribute to growth and business expansion.
Operational plan
An operational business plan revolves around near-term goals , especially those you will work towards achieving within a year. It defines the activities your venture will focus on and emphasizes the role of the workforce and budgeting in achieving the operational goals. In most situations, the heads of departments are key participants in the operational plans because of the need for approval in achieving the goals.
Strategic business plan
This is different from the others because it focuses on how departments can work together. This venture plan is more comprehensive and requires senior-level approval before implementing goals. This plan answers the questions of how to achieve goals, what resources are needed and the execution plans for achieving the goals.
Joint business planning tips
Companies that benefit from a joint business plan
A joint venture exists mainly as a contract between new cooperating partners. In forming a joint venture, each of the business partners agrees to the assets they will bring to the table and how income and expenses will be shared.
While a joint venture is a corporation between two or more entities, each of the companies, be it an individual, company, corporation or group of individuals, still has its original legal status, though not all joint ventures result in a new business entity. These companies could be sole proprietorships or partnerships, limited partnerships, corporations, limited liability companies or non-profit organizations.
Examples of a joint business plan
Perhaps you have an online venture selling high-quality products at reasonable prices, while needing to increase brand strength. Such an example of a joint business plan outlines a company overview, executive summary, product and service offerings, marketing strategy, market analysis, budget and financial planning.
A joint business plan may be designed for ventures rendering menu services such as lattes, espresso, coffee, cappuccinos, and sandwiches. The business plan outlines an executive summary and studies your competition , target market, marketing plan, ownership structure and operational plan.
A joint venture could be designed around offering services such as shipping, faxing, postal and copying to residents to conduct research , create debate space and generate ideas. This example of a business plan will include an executive summary, a vision and mission statement, goals, objectives, and measures, organizational structure, marketing analysis and a financial plan.
Top strategies for effective joint business plan
In a joint business venture, there are risks which include rising complexity, cultural diversity, high failure rates and language diversity. The strategies detailed below will benefit the venture in navigating the challenges through effective joint business planning.
Strategic plan
Strategic global planning is an effective business practice for entering a new market. It helps to identify opportunities and threats. Before beginning strategic planning, be sure that a joint venture is the right action for you. Compare the strengths and weaknesses of the partners to confirm a good match. Your strategic plan should explain why you want to collaborate with that partner and what you hope to achieve, how to monitor trends and collect good data. Some of the reasons you may wish for a new joint partner may be to enter a new market, geographic expansion, financing, etc.
The right partner
The choice of partner is crucial, but what is more important is understanding the effectiveness of partners in delivering on their promises. Do your due diligence on your partner’s attitude toward collaboration, performance and level of commitment. What about sharing the same objectives?
Effective communication for a great relationship
After your investigation, if you deem the partner fit, find mutual ground. Communication is the key to a good relationship. Make sure your partner understands the foundation of the joint venture and agreement. Ensure they agree on human resources, financial contributions and goals. To consolidate the stability of your venture, be upfront, honest and transparent about your objectives.
Clarify how, what, and where
Be clear on the vision, strategic plans and scoreboard to ensure that everyone is energized and united about the goal. Define a common working pattern. This has to include conflict management, decision-making, collaboration, problem-solving and technology strategies. Focus on win-win solutions.
Track performance
Is everyone putting in the hours and making productive headway? One way to gauge this information is by time tracking. One of the challenges for companies whose employees work in shifts and in different locations is tracking attendance. TimeTrack Attendance Tracking helps companies monitor employees’ work hours and leave days, so that managers can stay up to date on potential delays.
TimeTrack Attendance Tracking
Once you have set out the goals and vision for the new venture, establish key performance indicators, the data you want to track and the process to measure those performance metrics. This involves creating a joint scorecard for each metric against trends and competition. The targets you set must guard against possible problems the partners might encounter.
Build trust
Your best joint business strategy is to build trust and create value, without which your partnership is bound to fail. Trust is the foundation of every partnership. It is an important factor in business planning. Without it, neither partner can succeed. How do you manage diverse cultures, interests and languages if the partners lack trust? Trust builds team strength and encourages creativity while promoting collaboration.
Good leadership
The cost of poor leadership is so high that you must not venture into joint partnership without assurance of good leadership. Focus on building good leadership and not just creating “bosses”. Leadership presents the biggest opportunities to change the performance narrative. Create a strong leadership team, from whom all employees can learn.
A joint business venture is not without its challenges. To ensure a successful collaboration, focus on a clear strategy, excellent communication, transparency and strong leadership.
I am a researcher, writer, and self-published author. Over the last 9 years, I have dedicated my time to delivering unique content to startups and non-governmental organizations and have covered several topics, including wellness, technology, and entrepreneurship. I am now passionate about how time efficiency affects productivity, business performance, and profitability.
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What Is Joint Business Planning?
by Ursula Brady | Mar 3, 2022 | Blog Post
Executive Vice President and Chief Merchandising Officer , Sam’s Club (Walmart)
Tectonic Shifts in the Retail Environment
The symbiotic relationship between retailer and Consumer Packaged Goods (CPG) companies has, till now, been able to support steady growth based on demand alone. Now, as the Consumer Goods (CG) industry continues to shift away from organic expansion, the need to reach more customers and engage new audiences is more important than ever.
Let’s dive in to some of the key shifts our customers are seeing in the retail environment:
- Competition: Authentic challenger brands are continually entering the market. According to a recent survey carried out by McKinsey, 30-40% of consumers have been trying new brands and products during the pandemic. Of these consumers, 12% expect to continue to purchase the new brands after the pandemic. More competition = more difficulty obtaining or retaining market share.
- Price Pressures: Global supply chain stress has created a multitude of issues for companies seeking to keep costs down. Disruptions in labour markets have seen 15% of companies with insufficient labour for their facilities to keep up with increases in demand, leading to inflation re-emerging as a significant problem for the first time since the 1970s.
- Regulations: Changing consumer needs are not only encouraging the rise of new, healthier alternative brands but also instigating real legislative change. For example, in October 2022, HFSS (High in Fat, Salt & Sugar) regulations will see a crackdown on promotions for unhealthy food and drinks, which will have serious repercussions for both suppliers and retailers.
Traditional Account Management Is Obsolete
Retail, Wholesale & Distribution Leader , Deloitte Global
These shifts have caused retailers to change the way they do business; the traditional playbook needs to be thrown out and rewritten. The diversification we have seen in channels, models and store formats means that retailers’ expectations for suppliers have changed. And, as increasing numbers of authentic challenger brands come to market, competition has never been higher.
For both retailers and suppliers, Key Account Management (KAM) needs to be revisited. A culture of test & learn in real time needs to be applied to contend with these new market entrants and, with “key accounts contribut[ing] between 40% to 80% of revenue for a branded supplier” in developed markets as indicated by this article by Bain & Company , the time to reinvent is now.
Major incentives for change can be distilled into these three points:
Negotiation Can Feel Like a Zero-Sum Game
In the past, the CPG industry power dynamic has often favoured the supplier, but this is no longer the case. Only 3% of retailers are in an exclusive relationship with just one supplier in a given category, indicating the clout they hold to sway access to consumers is higher than ever before. With a number of Consumer Goods companies falling prey to a one-size-fits-all to their global business models, they have been losing valuable ground to more specialised, relevant competitors.
For CPG companies, visibility at point-of-sale for their products is vital. For retailers, getting the product in-store to sell is their business. Having retailers being ‘on-side’ and aligned is game-changing for suppliers.
But, as indicated in the name, Joint Business Plans need to be exactly that: Joint. If the manufacturers arrive at the table with a railroad agenda, offering little to no agency to the retailer, it will be too one-sided and off balanced. If retailers have unrealistic expectations, e.g broad assortments or 24-hour delivery, from certain suppliers, the equilibrium of the plan will be thrown off from the outset. This is where the value of insight-sharing cannot be understated; IGD asserts that both sides must ‘be prepared to share information with each other’ to achieve success.
Both CPG companies and retailers need to be able to influence the plan and offer respective insights to avoid creating a zero-sum atmosphere.
How Can Joint Business Planning Be Achieved?
For companies collaborating on Joint Business Plans, certain proactive steps need to be taken to fit the plan to benefit both parties. Bain & Company have set out five key steps that they have seen Consumer Goods companies take to achieve ‘more trustful and productive’ relationships and provide significant value.
1. Understand the Retailer’s Economics as Well as Your Own
Entering into a business relationship, such as a JBP, with a full understanding of where a potential partner is in the market is pivotal to a successful collaboration. Being aware of any weaknesses provides the opportunity to address them before they become an issue and impact your business.
In turn, a complete understanding of your own business’ strengths and weaknesses before embarking on any external partnership is equally important. A Joint Business Plan can only be successful if it truly brings benefit to both the retailers and CPG companies; without this, joint commitment can’t be assured.
This demands the creation of an environment where retailers and CPG companies can offer total visibility into their data, thereby enabling creation of target audiences and consumer journeys. As indicated by an IGD Industry Survey , ‘Too often trust is the biggest barrier to putting any proposal into action’. Data transparency reduces the possibility of down-the-line surprises and potential derailing of the plan.
2. Differentiate Your Joint Business Plan and Align It With Your Retailer’s Strategy to Target Shoppers
While keeping costs down may be advantageous, it is vital not to lose sight of the top priority; understanding the target customer segments.
Customer data extracted through the collaborative JBP can help maintain product stock levels, illustrate demand and identify trends in product distribution. Without this information, even a theoretically perfect Joint Business Plan will fail. Understanding who the customers are and what they are buying better enables CPG companies and retailers to produce and distribute – keeping the customer’s needs at the crux of their strategy.
It’s important to note that Joint Business plans are not one-size-fits-all; it may take more time to differentiate a plan to make it more tailored to a specific relationship, but the benefits can outweigh the expense.
3. Have Teams on the Ground Executing Key Customer Touchpoints and Confirming Compliance
Research by POI illustrates that 58% of CPG companies are struggling with retailer aligned compliance for store-level promotion execution. Clearly, there is a concerted need to ensure in-real time that assured promotions are being carried out, but 27% of CPG companies do not get any real-time insights into retailer compliance, forcing them to wait until the end of a cycle to make any significant changes.
While promotion compliance isn’t a new issue in the Consumer Goods industry, it can be a major roadblock to a JBP. With teams in the field, far more regular compliance checks can be performed and the information shared much wider, much faster.
4. Maintain Year-Round Contact With Customers at Multiple Levels and Functions
The dialogue between each party needs to continue beyond initial negotiations and agreements. Regular meetings provide opportunities to correct mid-cycle issues, where the retailer and CPG company can align on real-time results and solutions.
Without clearly defined and tracked performance metrics, the success of the JBP is uncertain. Both parties need to agree on what data sources are going to be reviewed. Expectations must be laid out internally and externally, to establish what each side hopes to get out of the arrangement. This will prevent potential disappointment if or when unaired expectations aren’t met.
It is also important to have discussed and agreed upon the terms and investment in the JBP. Going into a project aware of the value that each business is adding to the other and being able to quantify the ROI is fundamental to a successful Joint Business Plan.
5. Use the Most Advanced Tools and Insights to Stay on Top of Your Joint Numbers
As shown in the recent Promotion Optimization Institute (POI) State of the Industry Report , 64% of manufacturers have challenges when looking for data from retailers. When data is such a foundational element to gainful retailer partnerships, it needs to be shared. The ideal is to involve teams from across the company including distribution, sales, finance and marketing. Siloed internal communication can negatively impact information sharing and lead to failure of a JBP.
CPG companies need to leverage real-time insights pulled from a range of commercial data sources that allow them to optimize strategies based on their business goals and current supply and promotion constraints. This maximises the value of every dollar invested in trade spend.
Aforza & Joint Business Planning
Closely aligned with the tenets of Bain’s Key Account Management Commercial Excellence framework, Aforza drives Joint Business Planning with an end-to-end platform of core functionalities:
- Account 360° View : Gain a complete view of an account’s hierarchies and key relationships, as well as visibility into all engagement activity across channels.
- Real-time Data & Insights on Account Performance: Get real-time insights, from a range of commercial data sources, across all aspects of your key account performance.
- Integrated Trade Promotions: Optimize trade spend and target key customers by displaying a real-time view into promotion performance, inventory levels, sales order insights, budgets & funds, plans & objectives.
- Retail Execution Checks from Field Sales Teams: Leverage your teams in the field to check key account compliance and take promotion-based order capture with penny-perfect pricing on mobile; online or offline .
- Digital Asset Management : Ensuring all important business documents are centralised and accessible against the account, such as contracts and Joint Business Plans.
Check out this demo from Aforza’s Chief Product Officer, Nick Eales, as he showcases how leading Consumer Goods companies are leveraging Aforza to create productive account collaborations that unlock revenue potential like never before:
With industry-leading innovations and capabilities, the Aforza cloud & mobile solution continues to help consumer goods companies sell more and grow faster. Take the first steps now and create productive account collaborations that unlock revenue potential like never before.