Enter Into Joint Ventures With Caution

Enter Into Joint Ventures With Caution
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 joint venture entered into without research or caution is setting itself up for failure. If both parties don't take the process seriously they could lose valuable time and money, or worse destroy their business. To avoid these pitfalls, there are several things one can consider: choose your partner carefully, make sure you share a common goal and above all, stay organized.

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!

It's best to find out as much as you can about any partner candidates you're considering. Look up information about them online and ask them for references and a detailed resume.

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.

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.

Making sure that both partners share a similar vision is also very important. In order to reach a common goal, both parties must define it and see the path to reaching that goal. If you and your partner have disparate ideas about your goals, it's not likely your venture will last very long. You can't reach two different goals if they are in direct conflict with each other.

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.

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 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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