A joint venture, or JV, is the name for the entity created when two companies or individuals create a mutually beneficial partnership. Joint ventures can be a great means for small businesses to gain market share or increase their skills and services. In order to create a successful JV, however, there are a few things to keep in mind.
If you rush into a joint venture, at best you will be wasting time and money -- or at worst you could destroy the business you've worked hard to create. To avoid these pitfalls, you must choose the right partner, create a shared vision and make sure you stick to an organized business plan.
Your choice of partner is probably the most important aspect of creating a successful JV. It's very important that you know your partner well and are confident that they are a trustworthy person or organization. It can be all too easy to get sucked in by a smooth talker who promises you a huge list of client contacts or millions of dollars practically overnight. Don't let your heart's desire run away with your mind's better judgment. Remember, if it sounds too good to be true, it probably is!
Take the time to research your potential partner. Look into their past business practices, ask for references and proof of past successes. Make sure they can deliver what they're offering.
While it's important that you know your business partner well, it may also be a bad thing to know them too well. Joint ventures with family members or close friends may not be wise. For one thing, if things go bad, you run the risk of losing your business and your personal relationship. In addition, because you know the person so well, you may be tempted to skip important steps, like creating a business plan and drawing up a formal agreement. As a result, in the end, you may find that you didn't have the same goals or understanding at all.
It is also advisable to seek a partner with skills that compliment your own. You should trust them, but not be so close that your personal relationship will interfere with day-to-day business operations. Maybe you enjoy designing new advertising campaigns, but you can't find last month's electric bill to put it in your expenditure log. You could look for a partner with better organizational skills.
Determining that both you and your JV partner share a common vision is another important aspect. To reach a particular goal together, you must both know what the goal is and understand how you're going to get there. If your partner believes the goal of the JV is to grow the business to a very large one, and you believe the goal is to keep the business small so you can run it on the side, you're not very likely to work well together. You can't possibly reach both your and your partner's goals because they conflict!
Maintaining proper books and adhering to the business plan can make or break your JV. To start, write out a clear business plan that lines out your expected achievements and benchmarks for getting there. The plan will also define each partner's responsibilities.
Along with a clear business plan, it's important to draw up a binding contract that outlines the legal details of your JV. This agreement will articulate the legal responsibilities of each party.
In order to establish a successful joint venture, it's necessary to exercise self-control and time-management. Don't try to do too much all at once. Starting a new venture takes time and effort. At first, you most likely will not be able to focus on two projects at once. Before starting a new business venture, make sure you have the time and space in your life to properly focus on your new efforts.
With a good partnership with defined goals and values, strong organizational skills and a little time and effort, starting a joint venture can be very rewarding. In fact, it could be one of the most effective ways to increase your revenues. Just remember to research and do your homework to figure out how to make your joint venture work for you.
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