Is a Joint Venture Right for Me?
Once you’ve embraced collaboration as a means to achieve your highest potential in your project or venture, at some point you might start to see potential for more formal partnership.
Entering into a Join Venture is not something to undertake lightly. It is a major decision and requires careful consideration. Here are some of the basics of how Joint Ventures work and some key points to keep in mind when considering whether or not it’s the right move for your business.
The ultimate goal of embarking on a JV is to expand your business, whether by developing new products or moving into new markets. JV’s are particularly relevant for those hoping to expand their business overseas.
No matter the size of your business, Joint Ventures can be utilized to strengthen long-term relationships or to collaborate on short-term projects. A joint venture enables you to share risks and benefits with a partner and can supply you with access to established markets and distribution channels, more resources, greater capacity, or increased technical expertise.
Entering into this type of collaboration with another business is complex; building the right relationship takes time and effort. If you do not have a clear understanding of the goals and the way value will be shared moving forward, a Joint Venture can burn you in the long run. (Just ask IBM when it partnered with Microsoft in the early 1980’s.) Success in a JV depends on the right relationship, a clear and thorough understanding of the goals, and effective communication of the business plan. Here are a few things that could be deadly to your Joint Venture:
> Goals are not 100% clear
> Different objectives among respective partners
> Friction and poor cooperation due to different management styles
> Insufficient leadership and support in the early stages
> An imbalance in levels of investment, assets or expertise brought in by respective partners
Flexibility is at the heart of what makes a JV such an attractive option. For example, a JV can cover only part of what you do and have a limited life span, therefore limiting the commitment and exposure for both parties; or alternatively, you might decide to set up a new company altogether to handle a particular contract.
To help you decide what form of JV would best serve you, ask yourself how involved you want to be in managing it, and consider what could happen if the venture fails.
Understanding how much risk you are prepared to accept is a key element of choosing the right JV approach. Take the time to develop clarity around this central question and you will thank yourself down the road!
Until next time, Kelli Richards
CEO of The All Access Group, LLC
PS: The right mentor will also have the right CONNECTIONS to move any effort forward. Be sure to ask who they think they can bring to the table around advisorship, possible collaboration and even funding.
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