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.



The term "joint venture" actually refers to the reason behind the partnership, and not the partnership or new entity at all. There is no legal requirement for entering a joint venture -- anyone can do it. Individuals, limited licensing companies (LLCs), corporations, farmers' markets, co-ops and any organization can form a JV. Similarly, the new company created by the joint venture can be an organization, corporation or other legal entity.

Joint ventures are quite common in large businesses. They're often necessary for the purpose of entering into certain markets. Some countries require that foreign companies enter into a joint venture with a company from within the country in order to do business there. And, even when a joint venture isn't required, having one partner located in the geographical region offers a local presence and helps keep a better eye on the market there.

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.

Joint ventures can be cause for celebration for all parties involved -- or they can be a huge disaster if you're not careful. Successful joint ventures have five common characteristics. They are: 1) Creativity; 2) Persistence; 3) Visualization skills; 4) Negotiation skills; 5) Client relationship skills.

Creativity is a key skill in successfully seeking out and developing joint ventures. You must be able to see all the ways that your business could fit into various joint ventures. There are joint venture possibilities for virtually anyone and any kind of business if you know where -- and how -- to look. Creativity is also important when you're explaining the benefits of a joint venture to a potential business partner.

Persistence will come in especially handy as you begin to explain your ideas to those you'd like to partner with. This is especially true if you're approaching other small businesses who may not understand how joint ventures work.

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.

You need to expect a lot of negotiation with your partner while you're laying out your business plan and detailed agreement documents. You want to protect your interests, and of course your partner wants exactly the same thing. Sometimes you will disagree, and you must be willing to show determination and not give in to undesirable conditions. You must be prepared for some serious discussion.

Once you have successfully entered into a joint venture, you will need to find and build a client list. If your partner is providing clients for you, you must be extra attentive to their needs and make sure you don't lose them for your partner. If you have clients, they might be wary of your new business and fear that your products or services are about to change or become more expensive. It's important to keep in close touch with them and explain the changes in detail.

Joint ventures can be exceptional business opportunities when they're entered into properly. Just be sure you do your homework and understand exactly what your responsibilities in the venture will be and be clear about what you expect from your partner.