Joint Ventures Offer Benefits When You Know Where To Look

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 does not in fact refer to this new entity but to the reason for the partnership. Also, there are no legal limits on who can enter into a JV -- anyone can, including individuals, corporations, websites and small local businesses.

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 where it's not required, joint ventures offer fantastic benefits when they're not taken too lightly. One reason many small businesses enter into joint ventures is to take advantage of the products, skill sets or customer base of another company.

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 a wonderful tool for business, but they can be a disaster as well if they aren't properly planned out. Successful JVs usually comprise two companies with a combination of five characteristics: 1) Persistence; 2) Creativity; 3) Negotiation Skills; 4) Client Relationship Skills and 5) Visualization Skills.

Creativity is one of the most important of these characteristics. You must be able to think outside the box to see many different ways your business could benefit from a joint venture -- and all the different joint ventures your business could fit into. There are possibilities for just about anyone who's interested -- provided that you know where and how to look for them. It's also important to be creative when explaining your plan to a potential partner -- you don't want them falling asleep on you.

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.

You must be able to look beyond the present and visualize how your side of the partnership will fit with the other business's contribution. If you look ahead and see problems, you must iron them out before you make any firm commitments. Look for the bigger picture, or the bigger picture might not be as pretty as you'd hoped.

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.

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.