When two entities enter into an equal partnership, this is a joint venture. The essential defining factors of this union are equal risk and equal reward. That means that each party will divide the costs evenly, and will also share the profits. The parties may enter into a legally binding agreement that covers the responsibilities and expectations of each. Later, we will discuss the different forms a joint venture can take. First, we will get a more complete understanding of a joint venture.
When is the right time to partner?
You will have to take a good honest look at your company. Consider the timeline of your success. Where did you begin? Where are you now? Where do you see your company in 5 years? In 10? After grasping that perspective, explore the key components needed to get you to your short term goals, and then your long term goals. Finally, if what is needed could be supported by partnering with a company who does or has what you need, then now may be the time to form a joint venture.
Why a Joint Venture?
Entering into a joint venture has some known benefits. The first and maybe most appealing of them is the concept of spreading the liabilities between the two parties. Most parties are willing to put in their share of equity, feeling assured that the other party is equally invested. As the saying goes, people follow their money. Because of this, entering into a joint venture is a more secure form of partnership, as both have shared the risk. Both parties' reputations and profitability depend upon their doing their part to succeed.
Where do I find the right company to align with?
You'll have to ask yourself what parts of the country or internet you'd like to reach. Or if part of your company's vision is to become international, then a joint venture may be required. Many US companies must form a joint venture with an international one in order to do business in that country. The US company must partner with the foreign one in order to be legal.
Who should I JV with?
At times, choosing the right entity to join with can seem overwhelming. After all, you have a company to run. If you have your own research and development team, they can help find the company whose partnership will help your company develop into its next level of success. However, consider that there are joint ventures brokers who can do this job for you. After collecting information of your company's vision, they can help you find the best match for you particular goals.
How do I form a Joint Venture?
A joint venture will most commonly take the form of a corporation, a limited liability company, or a limited liability partnership. Many things should be considered when choosing which is right for you. Each of these have different tax implications, and it is recommended to consult a tax professional is deciphering the best fit for both parties.
Copyright (c) 2008 Christian Fea
Examples Of Joint Ventures
A joint venture is a form of partnership where businesses come together and share knowledge, market, and profits. Joint ventures come in all shapes and sizes. The good news for small business is that large companies see value in partnering with smaller companies due to a small company's ability to maneuver quickly in the marketplace, while providing specialized expertise and unique market insight. A small company can be a valuable joint venture partner to a large corporation; so don't be afraid to think big when you think joint venture.
Significantly benefiting from a joint venture
Your business can benefit from a joint venture in several ways. First, a joint venture with a larger corporation can shorten your learning curve when it comes to developing new products and gathering the necessary market intelligence for strategic market expansion. A small business can also glean information regarding the implementation processes and procedures that will improve productivity. Learning from companies who have already been around the block a time or two can save significant time and money for the small firm who is ready to grow and willing to listen to the expertise a larger company may bring to the table.
Next, a joint venture can be a source of additional resources and capital for you. Not only does partnering with a larger more established company enhance your credibility, but it can also open doors to resources and funding that were previously unavailable.
One small company, who successfully partnered with industry giants, was Mello Smello. An unknown husband and wife team partnered their unknown company with 3M and Disney to create scratch and sniff stickers of Disney characters. The end result was a multi-million dollar business. Why? Not only were there additional monetary resources, there were additional sales resources and distribution channels that would have taken years to develop if the husband and wife team would have chosen to go it on their own. By forming a joint venture, Mello Smello catapulted to the top.
Tapping into joint venture resources
One of the resources that should not be overlooked as a benefit of a joint venture is the additional marketing that is available. Whether you're a small business partnering with a large business or a small business partnering with another small business, chances are you will have the opportunity to promote your product or service to a database of customers that were previously untapped. All business is essentially broken down to the cost of obtaining a paying customer. By tapping into your venture partner's database, you dramatically shorten the customer solicitation cycle, which can translate to a huge savings in advertising and marketing.
Joint ventures don't all have to be multi-million dollar deals. A benefit to joint ventures between small businesses with similar or exactly the same products and services can be simply to help to free up much needed resources. For instance, say there's a tradeshow taking place in which you would like to participate, but the exhibit fee is a bit too much for you to handle. By forming a joint venture with another small business in a related field, or the same field, you both save money and expand your potential market.
Look to create a joint venture that offers benefits to both parties, and you are sure to reap the rewards.
Christian Fea has sinced written about articles on various topics from Partnerships, Joint Venture and Business Plan. Christian Fea is CEO of Synertegic, Inc. A strategic Collaboration Marketing consulting firm. He empowers business owners to discover and implement Integration, Alliance, and Joint Ventures marketing tactics to solve specific business challenges. He demon. Christian Fea's top article generates over 22200 views. Bookmark Christian Fea to your Favourites.
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