Whether you are starting out as an entrepreneur or have a successful business already, you know the importance of you clientele and growing your customer base. Sometimes it can be difficult to design and market new products and ideas on your own, especially if you are just starting out. One solution to this dilemma is Joint Ventures (JV). A joint venture is a business agreement between two parties with the intent to achieve a common goal.
Here are some great advantages to starting a joint venture for your business.
- Larger market
- New markets or geographical pentration
- Additional resources
- Diversification
- Credibility
You can reach a much larger marketing base, especially if your joint venture is with an international company. As more and more people have positive experiences with your company you will gain better credibility and trust from new customers. As your client base expands, you may have an increase in demand for your services or a need to design new services. If you do not yet have the technology available, your partner may be able to assist by providing knowledge and procedures you do not yet have access to on your own. Working in this manner will allow you to not only work more efficiently but also allows for the opportunity to diversify your services.
It is important to be cautious when entering any kind of new business arrangement. Here are some simple steps to take when getting started.
- Get to know your partner
- Define clear goals
- Define responsibilities
- Draw up a Joint Venture Agreement
While you are sharing resources and profit, there is also risk that is shared between both partners. With stakes like that, you will want to collaborate with someone that you are comfortable with. Trust is essential in any type of joint operation. Because of this, you will want to get to know your business partner before establishing a venture together. You will also want to define clear goals, what the project is trying to achieve, and what each party wants out of the venture. You will also want to define clearly the responsibilities of each person. Once this is done you will want to draw up a Joint Venture Agreement. This will help things move smoothly and ensure that the project is carried out as fairly as possibly.
A joint venture can be very beneficial to a new business; however, here are a few instances that are not negatives to the process, but things to watch out for.
- Disputes
- Imbalance
- Cultural differences
- Responsibility
- Time consumption
Without a properly drawn up joint venture agreement there may be disputes due to miscommunication. If the goals and responsibilities are not clearly defined, there may be conflict in regards to how balanced the project is, one partner may feel as if the other is not providing enough resources. Because of this, there is an increased responsibility to manage and oversee the project on both ends. This can be very time consuming, especially if the venture greatly increases the service area of your product. If you are exporting your product to a new country, or if your business partner is not from your native country, there may be cultural differences to overcome. Weigh your service area carefully.
With the right considerations and precautions taken, a joint venture can be a great solution for growing your business. Please contact us to start growing your business today.
— by George Tyler