One of my life lessons learned early in my business career was to surround myself with smart people. At the expense of being a bit boastful, I have been “top of my class” in the achievement of this approach, and the results speak for themselves.
A byproduct of an innovative and creative management team is the exploration of how to improve an already well-oiled machine. Our machine is firing on all cylinders.
What has been my formula? Enter the concept of joint ventures as a fast-tracked strategy for growth.
Many businesses today have experienced organic growth, while others have done so through acquisition or aggressive new business development initiatives.
For 115 years, Fernley & Fernley grew organically. Our clients typically came and stayed. At one point, the average account was with us for almost 24 years. However, about a decade ago, I came to an epiphany: for our company to continue to grow, we needed to take a hard look at our service delivery model, evaluate what we did well and what could be done better, and what could be done more efficiently through outsourced joint partnerships.
It was a philosophical shift for us, since we had rarely outsourced any of our management services, keeping them strictly in-house. Well, the concept of outsourcing was launched, and we never looked back. We subscribed to my self-imposed mantra of “do what you do best and farm out the rest.”
Growth through acquisition was also part of our growth structure. In 2006, we purchased an association management company that specialized in the medical and health care arena. It proved to be a low-risk venture, a great investment and it immediately positioned us as a player in this growth market.
Joint ventures have proven to be a valuable strategy and, in many cases, offer considerable advantages over acquisitions (even though acquisitions are still in our future). First and foremost, they cost less and offer minimal risk. Any privately-held company like ours is well-positioned to capitalize on this strength. Unlike public companies that have more rigid requirements, joint ventures for privately-held businesses are cleaner with obligations to a more limited group.
Was there a defining moment when Fernley & Fernley launched the joint venture concept? To be perfectly honest, no. My rationale was fairly simplistic:
1. We needed to develop a recognition and awareness that time and resources (within our firm and others) would continue to be stretched.
2. We also needed to develop a vision that our clients’ needs were going to change and we would have to be nimble enough to change with them.
3. We had to become aware that our clients’ needs would be growing exponentially as the composition within the membership would be more diversified, requiring a broad set of service delivery models.
4. We realized that a need to broaden our scope of management services was going to be required by the changing customer base.
5. We needed to position our company as being the total solution provider to our clients. We would be the central point for all their needs to be met — whether we provided the service in-house or outsourced it.
In the end, I came away with six lessons learned about joint ventures: Pick your partners carefully, educate them on your industry and clients — both internal and external, set clear expectations for everyone involved, allow them to fail (but only once), be sure that your partners are a cultural fit and ultimately, hold them accountable.
Joint venture relationships will continue to be part of any growth strategy going forward. Great opportunities exist by embracing this concept. Don’t sit on the sidelines. Embrace the concept, be aggressive and watch your company grow.
G.A. Taylor Fernley is president and CEO of Fernley & Fernley, an association management company founded in 1886. Reach him at email@example.com, or for more information, visit www.fernley.com.