Joint ventures and business partnerships
6 tips for a successful joint venture
A joint venture is when two or more businesses pool their resources and expertise to achieve a particular goal. A clear agreement is an essential part of building a good joint venture relationship. Here are some other key considerations.
1. Plan carefully
Every partnership should begin with careful planning. Review your business strategy to see if a joint venture is the best way to achieve your aims. Use our SWOT analysis example to consider the strengths and weaknesses of both businesses and see if your partner is a good match.
2. Communicate openly
Communication is a key part of building a relationship. Make sure that everyone involved understands the basics of the joint venture agreement, as well as the fine details, including goals, financial contributions, human resources and the expected length of the deal. It's usually a good idea to arrange regular, face-to-face meetings for all the key people involved in the joint venture. In some cases, you may have to legally inform and consult your employees.
3. Build trust
Sharing information openly, particularly on financial matters, helps build trust and credibility, and can prevent partners from becoming suspicious of each other. The more trust there is, the better the chances that your relationship will work.
4. Monitor performance
It's essential that everyone knows what you are trying to achieve and works towards the same goals. Establishing clear performance indicators lets you measure performance and set targets and can give you an early warning of potential problems.
5. Be flexible
With two companies making decisions, things can get complex even with simple projects. You should aim for a flexible relationship. Regularly review how you could improve the way things work and whether you should change your objectives.
6. Find a way to deal with problems
Even in the best relationship, you'll almost certainly have problems from time to time. Approach any disagreement positively, looking for 'win-win' solutions rather than trying to score points off each other. Your original joint venture agreement should set out agreed dispute resolution procedures in case you are unable to resolve your differences.
Forming a joint venture can be challenging, but if done right, it can be worth the effort. It can move your business in a positive direction and offer opportunities through increased revenue and reputation. Read more about joint venture advantages and disadvantages.