Many of the clients I have worked with have used Joint Ventures to accelerate business success.
Succeeding in a new business of any kind can be difficult.
It takes time, dedication, and some money to succeed.
You may have the time, and dedicated to succeed, but finances are tight.
If so, it can be challenging for you to do the necessary projects you need to achieve the success of which you dream.
How many times have you heard or said, “If I only had the money.”?
Being a solopreneur is great, but it is almost certain there is more than one person out there with similar goals to yours.
If you could only meet this person and work together, there’s a chance you could both do great things.
How does this happen?
How can you find people who have similar goals and dreams?
How can you find someone to help you achieve success?
That’s what this series of articles is going to show you.
I’m going to introduce you to a powerful tool you can use to achieve success in the business world.
It will especially help you amid fierce competition.
Its called – a Joint Venture
In the business world, Joint Ventures are very popular.
If you don’t know about them, and aren’t already using them, you can be at a disadvantage.
Chances are your competitors are using joint ventures to achieve their success.
Below are some of the most common questions I get asked when introducing this topic.
What is a Joint Venture?
At its core, a Joint Venture is a business agreement.
It’s like a joint undertaking where the parties involved agree to work together on a project.
The parties contribute equity.
Since they share control, they also share in the expenses, revenues, and other assets.
It is important to know that a joint venture is NOT a merger.
There is also no transfer of title or ownership involved in forming a joint venutre.
JV’s are usually for small projects but they are also used by big corporations who want to diversify.
When you’re just starting out in a business, a joint venture can help you achieve success in projects.
If there is project you cannot afford to start because of the costs involved, a joint venture partner would help by sharing those costs.
They could also share the effort load.
At the end, both partners in the JV would share the profits.
How Long Does a Joint Venture Last?
Joint ventures (JV’s) are usually temporary, although they can last for many years.
When you first create this type of temporary partnership, it is for one specific project.
If that project succeeds, the relationship may continue into other joint projects.
What Do The Venture Partners Need to Agree?
The act of partnering with someone else to achieve a common goal isn’t new.
It’s a well-known process that has stood the test of time.
A joint venture works best when it is executed well.
This means everyone knows what to do, how to do it, and when they must complete it.
Then, they do it.
For it to succeed, both parties need to commit to, and remain focused on the success of the project.
You also need to have a good plan developed, since you’ll both be putting money into the project.
It is important to define what everyone needs to do.
Create a clear, written agreement.
This will be the basis for your relationship.
Why Would I Need a Joint Venture?
There are a lot of reasons to form a joint venture.
You can expand your business, develop new products, or move over into new or larger markets.
If your business has strong growth potential and new original ideas, a joint venture could do a lot for you.
It could give you new resources, increase your capacity, improve your technical abilities.
Working with a partner can give you access to new markets and distribution channels.
When you have the right mindset for business, you want to find ways to improve your business in every way.
A joint venture is another way to help your business advance.
Remember, they don’t have to be permanent arrangements, and you don’t need to exchange trade secrets.
All you’re doing is finding a way that is rewarding to both partners and helps both of them advance.
I Don’t Like Sharing Control, Is That A Problem?
You can’t enter into a joint venture with a closed mind.
You have to realise that there are many different ways of doing things.
Someone else’s way might not be wrong just because it’s different.
You need to develop a new mindset, and stop thinking, “That’ the way it’s always been done.”
If you do, you can open yourself and your business to a world of new possibilities.
You might even learn something new.
In a joint venture you need to see things through an open mind and look at business from different perspectives.
A new mindset will help you see that you can find opportunities anywhere.
Look at each opportunity as a seed.
Plant it together and watch it grow.
How Many Parties Can Form a Joint Venture?
There is no set number of partners in a joint venture.
Many JV’s have more than two partners.
Sometimes, a partner may choose to be a “silent” partner.
Silent partners do not actively work in the project, but may contribute money, a venue, or other resources the venture needs to succeed.
Not everyone agrees that having two or more partners is a good idea.
Having more venture partners will cause the levels of management to be more complex.
Ventures with many partners may lead to disagreements and the increased monitoring costs.
Alternatively, having more than two partners in your venture could earn greater returns.
Plus, multiple partners does give the project resource diversity.
This diversity will add value to the joint venture in time.
Are Joint Ventures Risky?
There is no definite guarantee that a joint venture will succeed.
But with more people working on the same project, the risks are shared.
Your partner(s) can also help you to address issues, brainstorm ideas, take on challenges.
Your JV Agreement must include a statement about what success will look like.
Set checkpoints throughout the project which confirm the project is on target.
You must also agree what happens if the project misses these important milestones.
Be open and frank about how to decide if the agreed goal cannot be achieved.
This introductory article should have answered some of your basic questions about Joint Ventures.
Leave a note in the comments below if this was helpful.
If the idea of a Joint Venture is appealing, you will be pleased to learn that, over the coming weeks, I will go into more details about JVs including:
- How to Find a Potential Joint-Venture Partner
- Negotiating a Joint-Venture Partnership
- Tips for Joint Venture Agreements
- Getting your JV Projects Going
- Managing your JV Project
- Communication with your JV Partners
- Collaboration Tools and Software to Use
- Tips To Ensure JV Success
Until next time, think about some of the challenges you might take on if you had a Joint Venture Partner.