From small businesses to large corporations, the most successful companies begin and stick with a clear business plan. When a company defines its goals, lays out a path to meet objectives, and agrees on financial spending and expectations, it creates a shared vision and accountability to succeed.
Many businesses experience greater growth when partnering with another business. In the supplier and retailer relationship, both parties working independently would be detrimental. To create a mutually beneficial partnership, they must begin by defining each company’s responsibilities, expectations, and needs in a joint business plan.
What Is a Joint Business Plan?
A joint business plan (JBP) is the collaborative process of planning between a retailer and a supplier in which both companies agree on short-term and long-term objectives, financial goals, growth, and shared business initiatives for profitability.
Joint business planning focuses on agreeing on common objectives and aligning on a single goal or set of goals. The companies in the joint business plan must work together to accomplish a shared vision.
What Is the Purpose of a Joint Business Plan?
For retailers and suppliers, having a joint business plan can create a win-win strategy in growing consumer sales. An effective JBP allows suppliers to build stronger relationships with their retailers so both parties can mutually support and benefit from each other.
When a retailer and supplier recognize each others’ needs and agree on common goals, they can share insights to support each other and improve sales, customer growth, and processes.
How Does a Joint Business Plan Work?
Two companies can come together with a joint business plan because they have one thing in common: a shared shopper. Whether it is a supplier partnering with a retailer or a children’s clothing company partnering with a toy manufacturer, having the same target audience is the first element that brings the companies together.
The companies considering a joint business venture should then share their individual business plans and discuss their mutual growth opportunities. This is where the general goals and areas of support can be defined. Specific tactics and category strategies can also be fleshed out in early discussions before moving to the formal process.
Once both companies are in agreement that the partnership will be mutually beneficial, the joint business plan can be created. Formal contracts are drawn up, approved, signed, and the plan is ready to be executed. Periodic reviews and necessary adjustments to the JBP are recommended as needed.
Benefits of Joint Business Planning
Why enter into a joint business plan with another company? The benefits can be not only financial but educational as well:
- Aligning goals. For a retailer/supplier joint business plan, being aligned on goals creates clarity on all other areas of the business. Defining expectations on all areas from marketing to supply chain to sales goals leaves minimal area for questions. Agreeing on goals, no matter how and when they are measured, keeps both parties accountable and benefits both to meet expectations.
- Shared resources and exposure. Partnering with another company can bring a new audience and a new platform. In a simple retailer/supplier joint business plan, the retailer can introduce the supplier’s product to its core shoppers. At the same time, shoppers loyal to the supplier’s product or brand can be introduced to the retailer’s store and website for the first time.
- Greater return on investment. By partnering with another company with a shared vision, the benefits above will provide a better ROI when the plan is executed correctly.
Joint Business Planning Best Practices
How can companies ensure their joint business plan is a good fit for both parties? These are some best practices to include in preparation for entering into the partnership:
1. Align Internally First
Before entering into a joint business plan with another company, all members of the business must agree on the benefits of the partnership. Recognizing the advantages and seeing the bigger picture is key. When employees are in alignment within the company, it will be easier to align with the partnering company on the shared vision of the joint business plan.
2. Create the Plan Together
When two businesses enter into a partnership, the joint business plan should not be built by only one. A company sending another a complete plan or just a form to fill out is not collaborative. Both companies need to build the plan from the ground up. Collaborating in the development of the joint business plan is just as important as executing the plan itself.
3. Set Specific Goals
Expectations for success in the partnership need to be specific. “We need to grow sales” or “production costs will decrease” are good goals, but too general. Keep specifics in your plan that are as specific as they are realistic. If one company wants to grow sales by 40% in the next quarter, this should be spelled out in the joint business plan so get early support or push back from the other company.
4. Assign a Metric to Each Goal
Putting a metric with a goal keeps the company accountable to the mission of the joint business plan. For example, if the goal is to grow sales by 40% in the next quarter, it would be wise to assign a weekly growth metric. If the metric is too low over a few weeks, the plan shows that action needs to be taken immediately in order to meet the 40% sales growth goal for the quarter.
5. Communicate Responsibility and Accountability
The joint business plan is the place to eliminate all guesswork. If Company A is responsible for providing labels to Company B, be very specific about the responsible parties. Clarify that the packaging coordinator of Company A will mail the labels to the warehouse manager of Company B on the first of the month.
6. Include Risks and Solutions
Planning for setbacks is key to planning for success. The joint business plan should include any possible risks or obstacles foreseen by either company. Having solutions in place for multiple scenarios makes the plan easier to execute.
7. Constantly Evaluate the Relationship
Joint business plans work better with trust, mutual respect, and a great working relationship. Keeping the relationship healthy between the companies and individuals relying on each other brings more success to the overall plan. Monitor the relationship periodically and work to resolve conflicts as they arise.
Joint Business Plans at Walmart
Walmart works with its suppliers to create plans for sales and category growth. The company relies on suppliers to bring insights to the table to spot trends and get in front of potential gaps in the business.
Back in 2011, Walmart created a joint business plan with Proctor and Gamble to pick up lost sales in air fresheners. This category was down over 2% across the chain, but P&G brought insights to Walmart on how consumers were purchasing throughout the industry.
Consumers had no problem going to Walmart for aerosol sprays for under a dollar, but would then go to specialty stores to purchase expensive candles in the same scent. Through communicating through the joint business plan, Walmart was able to create excitement around higher price-point items and show the shared shopper they could purchase the extra items in one store.
Conclusion
Positive business collaborations can be extremely beneficial in growing retail sales. Two companies sharing a common vision can build on each other’s best practices and support each other to mutually win at the register.
Suppliers looking for support in their Walmart business have found great collaboration with 8th & Walton. Our team of experts supports suppliers to improve reporting, analytics, supply chain, accounting, and more. To begin a great collaboration with us, request a free 15-minute consultation this week.
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