Steering Clear of Joint Misadventures

Hi all

The most successful businesses are those that are geared to adapt to change, evolving almost instinctively to suit market needs. For some this may be about internal change, for others it could involve establishing a joint venture with a similarly minded business.

Joint ventures can complement skill sets, increase your customer base or expand geographic presence – providing opportunities (and profits) that might otherwise be unavailable.

While a joint venture (let’s refer to them as JV’s for the purpose of this article!) has its obvious attractions, there is also risk. To make it a success, you need to find that ‘special someone’ that’s the right fit for your company.

For those considering a JV, here are my top tips:

  • Do your research: There’s no foolproof way to implement a successful JV but careful planning is always the best place to start. Changing your business model can be potential pitfall so it needs careful consideration before you move forward. Setting clear objectives will make it a lot easier to establish exactly who you need to make it work and how it will work.
  • Know what you’re looking for: The name of the game is finding someone who is in a similar industry to your own (but not a direct competitor) who can bring new skills and resources to the table to complement your own. Your goal should be to enhance your offering – there’s no point in one online retailer partnering with another if what the business really needs is a shop front.
  • Explore your network: Look within your network first – is there someone within your existing relationships, your supply chain for example, that you could team up with? Remember, you already have relationships with your customers and suppliers so you’ll cut out a lot of the hard groundwork by working with someone you already know.
  • Do your due diligence: A JV is a legally binding and long-term commitment – make sure you carry out checks on potential partners before you sign up. Are they financially secure? Are they performing well? To get a balanced view, also find out what their customers and suppliers have to say. Ultimately though, working with other people will also involve subjective measures. There’s no legal contract that can ensure mutual respect and trust within the venture, so working chemistry should also be factored in.
  • Focus on communication: Once a decision has been made, set the precedent by showing flexibility and willingness to communicate openly – this will immediately create a feeling of trust.  Arrange for regular catch-ups for the key people involved, especially during the planning stages. It will keep you on track and make further decision making a much smoother process.
  • Get it in writing: By this point you will have jointly established what you hope to achieve and what each party is expected to contribute. While the ownership of some joint ventures can be divided equally among the participants, it’s not always necessarily the case. It may be that one party has a controlling interest, so make the distinction from day one.  Ensure it’s clearly stated in a written agreement.

Congratulations – once that’s all done you should now be well on your way to a successful joint venture!

That said, expect teething problems and anticipate both highs and lows. As with any successful relationship, you need to be prepared to work hard and show commitment to make it work.

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One Response

  1. The subject is fully clear but why does the text lack clarity? But in general your blog is great.

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