Enter Into Joint Ventures With Caution

2007-06-26 Word Count: 716 Category: Marketing

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.

A JV that is entered into quickly and without much thought can be at best a waste of time and, possibly, money. At worst, it could be disastrous. To avoid unsuccessful JVs, there are several critical factors to keep in mind, such as choice of partner, a common vision, and good organization.

The choice of partner is the most vital part of starting a JV. You should know the person well enough to have confidence in them and to know whether they are trustworthy. There are plenty of fast talkers out there who are eager to separate a fool from his money. As with everything else in life, 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.

Knowing as much as you can about your partner is important, but it can be detrimental to enter into a business agreement with a close friend or loved one. If the JV were to fail, you could lose a valuable relationship along with your business. It can also be tempting to cut corners if you're working with a friend. It can be awkward to write out a binding legal contract that outlines both of your responsibilities when you would rather just trust the person to uphold his or her end of the deal. If you give in to this temptation, it might turn out that you never had the same long-term vision of the JV at all, and it can turn into a disappointment for all involved.

Just like in a marriage, it's good to look for a partner that balances your prominent traits. Maybe you're good at keeping financial records, but you have trouble thinking of creative marketing campaigns. Look for a partner who can add some pizzazz to your joint venture. In turn, she might not be the best bookkeeper, so your skill set will compliment hers as well.

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!

Keeping yourself organized can help guarantee that everyone is on the same page. The first step is to write a business plan that specifically outlines your goals and when you plan to achieve them. The business plan will also define the specific products, skills or services each partner brings into the JV.

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.

Establishing a successful JV also requires that you organize your time. Don't spread yourself too thin. Understand that a new business takes a lot of time and energy. Don't expect to be able to focus on two projects at the same time. Choose a time in your life when you have enough time, support, and resources to really focus on the JV.

With a good partnership, common goals and excellent organization, a joint venture can be just the thing to increase your fledgling company's size, offerings, technologies and skills. Taking the time to do your homework and learn as much as you can about the process can make the joint venture work for you as hard as you are working for it.

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The writer of this article, Justin Bryce, is an expert with Joint Ventures. To learn about Joint Venture Benefits visit Justin at: www.lazy-internet-marketing.com/bm/joint-ventures.ag.php