Sometimes entrepreneurs find it easier to team up with people who have similar interests and get involved in a joint venture. Whether it is staring a new company or buying a business, a joint venture allows people to pool their resources, knowledge and talent to try and develop a successful organization.
Below are some of the reasons a joint venture is attractive to many people:
- Spreads around the financial burden;
- Offers ways to offset responsibility;
- Allows the company to benefit from the combined talents of many people.
Anyone considering a joint venture with another individual or with a group will want to spend some time understanding the keys to success in this kind of business arrangement. No matter who you are going into a joint venture with, it is important to remember that it is a business arrangement, and business arrangements require significant planning.
Be sure the arrangement is complimentary
In business, joint venture participants do not necessarily have to like each other to be successful. But what they do need is a partner that offers complimentary skills or resources to their own. Their has to be an equal contribution to the JV, otherwise you could find yourself doing all of the work!
The complimentary aspects of a joint venture can include:
- Business contacts in a field you are unfamiliar with;
- Business skills that compliment your own;
- Availability to funding that you would otherwise not be able to access;
If you are not good at intense negotiations, then your joint venture needs to include someone who can take care of that part of the business. If you have the sales skills to open up new markets but lack the technical product knowledge, then your joint venture needs to deliver that product knowledge for the endeavor to be successful.
Get everything in writing
You need to outline the entire structure of the joint venture and get all parties to sign off on an agreement that places guidelines on business operations if it is going to succeed. You may be going into business with your own family, but you all still need to protect your interests utilizing a structure that is in writing.
Too many people perceive this sort of agreement to be a lack of trust on the part of the person who is insisting on having it. The truth is that an organized structure to a joint venture creates a way for everyone to know exactly what their responsibilities will be and how every problem is addressed. An agreement prior to starting a joint venture will not only protect all parties, it will also develop smooth business processes that will make the arrangement more successful.
Do your part
The simplest piece of advice any entrepreneur can get is to do their job and the rest will fall into place. A joint venture agreement will let each person know exactly what is expected of them, but each person still needs to go out and do their part if the venture is going to succeed.
A structure like a joint venture cannot succeed if each person is not contributing what is expected of them. The rest of the group can bring all of its resources to the table that are necessary to succeed, but it will fail if one piece is consistently missing.
Not every joint venture finds the principal parties working in the same building or same office complex together. Sometimes a joint venture can be between two companies located in different parts of town. Whether it is in person or over the Internet, the members of a joint venture need to meet regularly for the project to succeed.
The need for members of a joint venture to meet becomes even more critical when the project starts to gain momentum and find success. There may be a structural agreement in place that helps the group to make decisions, but the group dynamic requires constant contact between its members to remain intact.
A joint venture can be exciting because the people involved want to see what kinds of results they get when they combine their resources.
There are many reasons why joint ventures fail, which should become models for others to use to create successful partnerships. By planning everything out comprehensively and maintaining contact at all times, a group in a joint venture can find success that exceeds their expectations.
Author: Peter Watson is the CEO and founder of www.bizlistings.com.au – A buying and selling business for sale website.