Business owners who are looking to increase their market share, gain entry, or even boost their revenues for tremendous short-term gains, a joint venture is a tried-and-true way of accomplishing those goals.
How a Joint Venture Works
Simply-put: a joint venture is when 2 parties merge as one to accomplish the same goals. This is an equal, 50-50 partnership when it comes to investment of money, time, and resources to build the infrastructure needed. These ventures can range from small projects to big, long-term collaborations in the corporate world. Small businesses can benefit a lot from a joint venture partner to help lower costs and bottom-lines when trying to corner a market or create a new one.
The foundation of a working joint venture project is, ultimately, honesty and good communication. If either of the business partners are actively trying to cheat their ways out of the equal share of responsibility and profits, then chances are you will be destroying your venture from the inside out.
Just imagine that your competition, whether it is now or later, is going to be working 100% to gain an edge on your market share and any wasted energy combatting each other could have been used to improve your standing.
Chances are your joint venture is going to be made to take down a bigger opponent, but it can also be used by the big guys to infiltrate other markets. A large corporation might acquire some smaller companies with strong IP that they can use to expand their business.
Then, of course, a lot of joint venture partners are made to get around local business laws to allow for more control over the market.
Making it Work
Joint Venture partnerships can be deceptively simple when you’re wrapped-up in the excitement of the prospects of gaining more power in a market, but overlooking the work and legal proceedings can be a fatal error that can leave you holding the short-end of the stick.
Everything needs to be executed to the finest detail of your businesses’ strategy and the I’s must be dotted, T’s must be crossed. You can get a fairly decent idea of what this entails with the resources online and looks at some joint venture legal agreement forms, but you should definitely seek the appropriate legal advice before ever talking to the other party about creating this partnership. You don’t want to be taken advantage of, nor do you want to scare away your prospective relationship off of misinformation.