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Joint Ventures (JV) are business strategies where two or more companies team up to form a temporary or long term collaboration. Business partners contribute equity, share costs, share profit and responsibilities, basically uniting available independent resources to form a new entity, for which they share control.
JV are often regarded as unsafe and risky, but Internet Marketing statistics show that a lower level of implication of both sides results in a better collaboration. Unlike a business partnership, JV do not imply a permanent collaboration, and participating sides are not obligated by contract to continue collaborating no matter what, meaning they can retire whenever they want, leaving control of their part and of their resources to the other parties, depending on the initial agreement.
When you have a business that is only producing low to medium profits, and you want to capture more of the market, you would be best suited to team up with an already existing business that has set a name for itself and has a solid client base. This way you contribute with your available resources, and basically boost the stronger companys profit, a share of which you are entitled to.
Some questions still arise though, regarding JV. When should you start, how should you pick your partners, how do you know when its time to pull out, the pros and cons of different types of JV, and more.
For example, if you are a new business, and you want to sell more, but you do not have the necessary client base, you are not well known, or you do not have the resources for a good publicity campaign, you should form a JV as soon as possible, with a business that has at least some experience, that has a solid client base is well known.
Basically, in a JV, you businesses team up, contribute with resources, and usually the bigger businesses indirectly control the flow of the collaboration, and at the end, both big and small businesses collect profit and grow continuously.
The type of partner you should look for in a JV depends on the nature of your business. JV help to fill gaps, so you have to think of the problem this way: what do you need, but dont have and other businesses have. Everyone contributes resources, and everyone gets to make a profit based upon gaps filled by everyone else.
For example, if you are an old business, with a solid client base and enough resources, but you cant keep up with industry changes, and a younger business has the spark needed, but it doesnt have the clients, or resources, its a good idea to collaborate, and you could both make serious profit.
Sometimes business plans dont go too well, thats why its important to know when to pull out. JV offer you the possibility to save yourself in case of failure, so when you sense that things arent going to well, and its not just a phase, pull out fast.
The answer to any question depends on the particular aspects of each business, thats why a proper research needs to be done before accepting any business partnership. JV offer a safe and secure way to make profit, but are not 100% full proof, so its essential to be careful.