The Spoils and Pitfalls of Joint Ventures
- Date: 2007-06-10 - Word Count: 802
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If you've done any kind of research about starting a business or helping your new business to grow, you've probably run across the term "joint venture" or "JV." A joint venture is a means of partnering with someone else for specific business reasons, such as to build upon each other's strengths or to enter into a new market. When two entities enter into a joint venture agreement, they create a whole new entity.
Joint venture actually refers to the reason for the partnership and not to the entity created by the joint venture. Anyone can enter into a joint venture agreement. The forming partners can be individuals, corporations, organizations, limited licensing companies (LLCs), or any combination of these. Likewise, the resulting entity can be an LLC, corporation, or any other legal structure.
It's common for very large businesses to enter into joint ventures. In fact, they often need them in order to enter new markets or attract fresh blood. Some countries have laws in place that demand that any foreign business must create a joint venture with a home-grown company before doing business in that country. This can work to the foreign company's advantage if they don't plan to move operations overseas. Having people on the ground where you're doing business is the easiest way to watch the local economy.
Even when a JV isn't a requirement, they can give a company a great advantage -- as long as they are carefully considered. Small companies often enter into joint ventures in order to take advantage of skills, management styles and even the customer bases of larger, better established companies.
For example, let's say you have incredible computer repair skills. Your only problem is that you don't have much of a customer base and very little money to advertise. To help your business grow, you approach a local computer sales store that doesn't currently offer repair services to its clients. You propose a joint venture where the store refers its clients to you, and only you, for repairs. The benefits? You get a steady flow of business at no cost to you, and the store adds valuable repair services to its list of offerings to clients.
Although joint ventures offer a great many benefits to all parties involved, they can be disastrous if they're taken too lightly. Small businesses that are able to successfully enter into joint ventures generally possess five common characteristics: 1) Creativity; 2) Persistence; 3) Visualization skills; 4) Negotiation skills; 5) Client relationship skills.
To seek out and create successful joint ventures, you must let your creative juices flow. Look at all, not just some, of the businesses that could benefit from your help in your area. Joint venture possibilities are everywhere if you look, and pretty much anyone can benefit in one way or another from partnering with someone new. Explaining your idea to a potential partner also requires creativity to keep it interesting.
Persistence is particularly important when you first approach your potential partners. Small businesses have a lot going on, and the owners can forget you if you're not careful. You might also have to explain what a joint venture is if they don't already know.
Visualization is important because you've got to be able to see how your end of the joint venture will fit together with your partner's end. The two parts must lock together like pieces of a puzzle to form one cohesive picture. If you can't see that picture, your venture will have very little chance of succeeding.
When you're putting together your JV agreement and business plan, you'll spend a lot of time negotiating with your partner. You'll want to make sure you're getting exactly what you want out of the deal, and that means sometimes you'll have to be pretty hard-nosed. If you have difficulty entering into professional negotiations, forming a strong joint venture that provides the best benefits for you will be very difficult.
Finally, once your joint venture is under way, you're going to have to spend some time nurturing your client relationships. This is especially true if you're the partner bringing in the clients. Your existing clients may not understand the joint venture and may fear that their level of service will change. To ensure your client relationships stay strong, you'll need to stay in contact with your customers and work at understanding their needs. This way, you'll not only retain your customers, but you'll also know which offers, products and services they'll respond to.
Joint ventures offer great opportunities for those who enter into them thoughtfully, carefully and properly. If you do your research and make sure to uphold your end of the bargain, it's likely you and your partner will find great success.
Lazy Internet Marketing (Justins Website) is our recommended
resource for Internet Marketing including Joint Venture
training on the Internet. To learn more about Joint Ventures
try: http://www.lazy-internet-marketing.com/bm/joint-ventures.ag.php
Joint venture actually refers to the reason for the partnership and not to the entity created by the joint venture. Anyone can enter into a joint venture agreement. The forming partners can be individuals, corporations, organizations, limited licensing companies (LLCs), or any combination of these. Likewise, the resulting entity can be an LLC, corporation, or any other legal structure.
It's common for very large businesses to enter into joint ventures. In fact, they often need them in order to enter new markets or attract fresh blood. Some countries have laws in place that demand that any foreign business must create a joint venture with a home-grown company before doing business in that country. This can work to the foreign company's advantage if they don't plan to move operations overseas. Having people on the ground where you're doing business is the easiest way to watch the local economy.
Even when a JV isn't a requirement, they can give a company a great advantage -- as long as they are carefully considered. Small companies often enter into joint ventures in order to take advantage of skills, management styles and even the customer bases of larger, better established companies.
For example, let's say you have incredible computer repair skills. Your only problem is that you don't have much of a customer base and very little money to advertise. To help your business grow, you approach a local computer sales store that doesn't currently offer repair services to its clients. You propose a joint venture where the store refers its clients to you, and only you, for repairs. The benefits? You get a steady flow of business at no cost to you, and the store adds valuable repair services to its list of offerings to clients.
Although joint ventures offer a great many benefits to all parties involved, they can be disastrous if they're taken too lightly. Small businesses that are able to successfully enter into joint ventures generally possess five common characteristics: 1) Creativity; 2) Persistence; 3) Visualization skills; 4) Negotiation skills; 5) Client relationship skills.
To seek out and create successful joint ventures, you must let your creative juices flow. Look at all, not just some, of the businesses that could benefit from your help in your area. Joint venture possibilities are everywhere if you look, and pretty much anyone can benefit in one way or another from partnering with someone new. Explaining your idea to a potential partner also requires creativity to keep it interesting.
Persistence is particularly important when you first approach your potential partners. Small businesses have a lot going on, and the owners can forget you if you're not careful. You might also have to explain what a joint venture is if they don't already know.
Visualization is important because you've got to be able to see how your end of the joint venture will fit together with your partner's end. The two parts must lock together like pieces of a puzzle to form one cohesive picture. If you can't see that picture, your venture will have very little chance of succeeding.
When you're putting together your JV agreement and business plan, you'll spend a lot of time negotiating with your partner. You'll want to make sure you're getting exactly what you want out of the deal, and that means sometimes you'll have to be pretty hard-nosed. If you have difficulty entering into professional negotiations, forming a strong joint venture that provides the best benefits for you will be very difficult.
Finally, once your joint venture is under way, you're going to have to spend some time nurturing your client relationships. This is especially true if you're the partner bringing in the clients. Your existing clients may not understand the joint venture and may fear that their level of service will change. To ensure your client relationships stay strong, you'll need to stay in contact with your customers and work at understanding their needs. This way, you'll not only retain your customers, but you'll also know which offers, products and services they'll respond to.
Joint ventures offer great opportunities for those who enter into them thoughtfully, carefully and properly. If you do your research and make sure to uphold your end of the bargain, it's likely you and your partner will find great success.
Lazy Internet Marketing (Justins Website) is our recommended
resource for Internet Marketing including Joint Venture
training on the Internet. To learn more about Joint Ventures
try: http://www.lazy-internet-marketing.com/bm/joint-ventures.ag.php
Related Tags: benefits, joint ventures, joint venture, joint venture information, joint venture opportunity, successful joint venture
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