This module explores the benefits of; 3rd party Joint Venture (JV) partners, connection points, referrals and testimonials.
Joint Venture Partners May Be An Option
A joint venture partner can help your business grow faster, increase productivity and generate greater profits.
What Is A Joint Venture Partner?
Simply put, a joint venture involves two or more businesses pooling their resources and expertise to achieve a particular goal.
The risks and rewards of the enterprise are also shared.
The reasons behind forming a joint venture include business expansion, development of new products or moving into new markets, particularly overseas.
Your business may have strong potential for growth and you may have innovative ideas and products. However, a joint venture could give you:
- More resources
- Greater capacity
- Increased technical expertise
- Access to established markets and distribution channels
Entering into a joint venture is a major decision. This information provides an overview of the main ways in which you can set up a joint venture, the advantages and disadvantages of doing so, how to assess if you are ready to commit, what to look for in a joint venture partner and how to make it work.
Joint Venture Benefits & Risks
Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects.
A successful joint venture can offer:
- Access to new markets and distribution networks
- Increased capacity
- Sharing of risks and costs with a partner
- Access to greater resources, including specialized staff, technology and finance
A joint venture can also be very flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting the commitment for both parties and the business’ exposure.
Joint ventures are especially popular with businesses in the transport and travel industries that operate in different countries.
The risks of joint ventures
Partnering with another business can be complex. It takes time and effort to build the right relationship. Problems are likely to arise if:
- The objectives of the venture are not 100 per cent clear and communicated to everyone involved
- The partners have different objectives for the joint venture
- There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners
- Different cultures and management styles result in poor integration and cooperation
- The partners don’t provide sufficient leadership and support in the early stages
Success in a joint venture depends on thorough research and analysis of aims and objectives. This should be followed up with effective communication of the business plan to everyone involved.
Assess Your Readiness For A Joint Venture
Setting up a joint venture can represent a major change to your business. However beneficial it may be to your potential for growth, it needs to fit with your overall business strategy.
It’s important to review your business strategy before committing to a joint venture. This should help you define what you can realistically expect. In fact, you might decide that there are better ways to achieve your business aims.
You may also want to look at what other businesses are doing, particularly those that operate in similar markets to yours. Seeing how they use joint ventures could help you choose the best approach for your business.
At the same time, you could try to identify the skills they apply to partner successfully.
You can benefit from examining your own business. Be realistic about your strengths and weaknesses – consider performing a SWOT (strengths, weaknesses, opportunities and threats) analysis to discover whether the two businesses are a good fit. You will almost certainly want to find a joint venture partner that complements your own business’ strengths and weaknesses.
You should take into account your employees’ attitudes and bear in mind that people can feel threatened by a joint venture. It can also be difficult to build effective working relationships if your partner has a different way of doing things.
If you do decide to form a joint venture, it may well help your business to grow faster, increase productivity and generate greater profits. Joint ventures often enable growth without having to borrow funds or look for outside investors.
You may also be able to use your joint venture partner’s customer database to market your product, or offer your partner’s services and products to your existing customers.
Joint venture partners also benefit from being able to join forces in purchasing, research and development.