Many businesses are able to use joint ventures to good advantage. When two companies join their complementary skills and assets around the common goal, it's easy to envisage a good outcome.
However, joint ventures don't always succeed. You should not enter into one without careful consideration. Any type of corporate partnership will almost certainly change the way your business works, so it is vital to:
- have a clear business rationale for change
- have alignment with your existing business strategy
- carefully select partners and structure of the partnership
- agree management, governance and decision processes early
- sufficiently plan for implementation, operations and exit contingencies
Careful planning and research is always the best place to start when implementing any change in your business. See how to plan your joint venture relationship.
Review your 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. You might decide that there are better ways to achieve your business aims. See assess your options for growth and mergers and acquisitions.
Carry out a SWOT analysis
Before you enter into a joint venture, you should take some time to examine your own business performance. Be realistic about your business's strengths and weaknesses.
Consider performing a SWOT (strengths, weaknesses, opportunities and threats) analysis to discover if the two businesses are a good fit. You will almost certainly want to find a joint venture partner that complements your own strengths and weaknesses. See our SWOT analysis example.
Manage change in your business
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. It may help to follow best practices in change management.
Examples of successful joint ventures
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.