Successful Joint ventures Strategies For Greater Profits.
A joint venture is an arrangement where two or more parties referred to as partners, agree to cooperate to advance their mutual interests. The partners in a joint venture may be individuals, corporate organizations, non profit organisations such as religious bodies , churches etc, businesses, or even governments or a combination of any of the above for the purpose pulling their resources together, in order to increase the possibilities of each achieving their short and long term goals and to increase their expansion.
Joint venture or what is also referred to as partnership is usually a contractual arrangement involving two or more enterprises to execute a certain goal or undertaking.
It could also be defined as “An contract to work for a single identified task by two or more partners for a particular goal to make profits or promote a goal for other reasons of mutual benefits.
It may be formed to engage in a particular transaction or to operate an on-going business enterprise.
Registered Ordinary or General Partnership
For instance, if two or more joint venture partners form a certified ordinary or general partnership, then the liability of the partners will be joint and several
If on the other hand, the joint venture partners form a limited partnership, then the general partners in the joint venture will assume full, personal, joint and several liability while the limited partners in the parnership will be liable only to the extent of their agreed commitment.
Private Limited Company or Share Company Partnership
In the case of the joint venture partners form either a private limited company or share company, then their liability will be limited to the extent of their mutual agreement..
While joint venturing is a powerful way to pool resources, capital and expertise together and also reduce the exposure of risk to all involved in a business, it can also present some challenges as well.
For instance, one of the partners may come up with an idea that may help the help the joint venture to increase business and profits, the other partner may not be too keen for some reason or lack of adequate knowledge or foresight.
The other partners may be more concerned about the risks involved and their profits.
If there should be any reason to alter the original Joint venture agreement, ther may be crisis. Some of the partners may not agree on profit sharing based on the original investment pool or a new arrangement.
There may be challenges on how to effectively work out an acceptable contribution of each partner beyond the initial stake in the new dispensation.
Choosing the right joint venture partner
The ideal partner in a joint venture is one that has the required resources, skills and assets that complement those already exiting before the partnership
18 Steps To Take Before Embarking On Partnership
If you decide to go into a new partnership, there are some basic per-requisites that you must follow to carry out some basic checks.
- Before you consider going into any partnership at all or signing up to a joint venture agreement with any partner, it is important to protect the interest of your own business.
- This should include among other things the preparation of legal documents to protect your company from future litigation and avoidable legal tussle and financial and property loss as well as own trade secrets.
- First and foremost, are your potential business partners financially secured?
- It is important to investigate whether your potential partner holds any intellectual property rights agreements.
- How would the joint venture affect your relationship with. your existing customers and especially those you have a long-term relationship with.
- How would it affect any present agreements with other partners or financiers of your business and that of your potential partner.
- Do your prospective partners have joint venture partnerships with any other businesses?
- What are the kinds of agreements do your potential partners have in place with their employees an any consultants if there is any?
- What financial obligation do your potential partners have? Are they financially committed somewhere or do they have any credit problems?
- Ascertain the performance of the prospective partner
- What are their core values and their effects on the partnership?.
- Do they have the same or better level of commitment to your goals?
- Do you share the same business objectives?
- Can they they be trusted to perform and remain loyal to the agreement?
- Check their brand values. Would these complement yours or improve on the existing one for your business?
- Their reputation is very important. What kind of reputation do they have in the industry, with their customers and the public?
- What is the quality of the management team they have in place?
- What is the level of the productivity of their workforce, and the effectiveness of their marketing strategies?
Once all these are properly and professionally analyzed and appropriate actions taken in the joint venture process you can be sure of going into a very profitable joint venture that would expand your business beyond your own capability with a greater increase in profit that would be unattainable where such joint venture is non existent
If you need any help or further information in connection with anything I have discussed here, please feel free to leave a comment below or you can still also get in touch with me through my profile at Wealthy Affiliate