So, you want to take on a JV Partner — but you’re scared of what might happen. And rightfully so.
When two business entities join together to work on a specific project, magic can happen just as easily as chaos can. While you can achieve more with a JV than you ever could alone, there are a few common mistakes that could get in the way of your success.
Be sure to look out for the following.
Failing To Fully Vet Your Partner
You need to be able to fully trust your JV partner. They should possess the skills and resources you need, and they need to have a good reputation.
One huge mistake many people make is failing to thoroughly research and gain objective information about their potential partners. So be sure to do your homework.
Expecting Things To Work Without A Plan
Although it’s a collaborative project, you have to do a great deal of planning and you can’t expect your partner to do it all.
Create a detailed timeline and use a shared calendar so you both can stay on track. Try to think of all the moving parts and any unexpected issues that may arise.
Forgetting About Finances
Even an online JV project that requires little in the way of capital will require some funding and financial planning.
Make sure you outline where the money is coming from, who is paying what, and how the profits will be allocated. Create a detailed budget and a plan in case the funding runs out and you need more.
Basing Your Partnership On A Handshake
No matter how informal you like to be or how well you know your JV partner, you always need a contract.
This isn’t about trust. A contract clarifies the details of the partnership. You need to have everything in writing. Your contract lays out the terms, clears up any potential misunderstandings, stipulates when the JV ends and provides insurance just in case you have disagreements.
Throughout the course of the JV — not just at the beginning — there should be regular contact between the two parties. The purpose is to update each other, offer a chance to voice questions or concerns, and make sure you’re still on track toward your common goals.
Without communication, things can get messy without you even realizing it.
Giving Too Much Away
At the beginning of each JV, you need to decide how much control over your business you are giving up.
Be careful with things like your brand or your client list. If the partnership goes sour, these are things you don’t want in the other person’s hands.
A JV is exciting, but don’t get carried away. Set realistic expectations about what you’ll achieve together and create contingency plans in case things don’t work out. Clarify all of this in writing so everybody is on the same page — and so you can avoid any of that scary JV drama.
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