If you’ve been in the entrepreneur game for a bit, you’ve probably heard of the term joint venture or JV partnership. And if you’ve never taken any business classes, chances are you have no idea what that means.
To break it down, a joint venture is a type of business partnership where two or more parties pool their resources to achieve a specific objective. In most cases, the objective is a temporary project that benefits both parties in terms of money or new leads.
Below are a few specific ways JV partnerships can help your business.
Access To Audiences & Resources
There are many reasons why businesses from this type of partnership. Chief among them is that it gives you access to the resources of another business.
This could mean their skills or expertise in areas you lack, or it could be access to finances or sharing expenses to lower costs. It could also be access to their audience. By working together, you get exposed to their customers and vice versa.
Joint Ventures Are Highly Flexible
Once you’ve found a joint venture partner and confirmed the basics of the project, the next step is to hammer out a detailed agreement. JVs are usually short-term partnerships with a fixed end date. Within that time, you can negotiate with your partner on the terms, choosing the ideal conditions that are most suitable to both parties and their goals.
Sharing Rewards But Also Risks
Joint ventures allow you to pool resources and share the rewards of your efforts, but it also lets you spread around the risk. With two companies contributing capital and labor, there is less loss for you if the project fails. A JV offers an excellent opportunity to take a bit of risk such as exploring a new market.
Build Relationships With New Contacts
One benefit to forming partnerships is that you can use them to deepen relationships you’ve just started with new contacts. As you add people to your business network, you can reach out to them for projects and build relationships through a joint venture.
You Have A Way Out
Finally, JV partnerships are usually temporary and an exit is built into the contract. If things aren’t going the way you expected, you’re not locked in for life. You can wait until the agreement reaches its end, and then analyze it to determine what went wrong.
The Potential Risks Of Joint Ventures
Before getting into your joint venture, you should be aware of the potential risks:
- There could be differences in resources, expertise, culture, or expectations that can derail the project.
- A business partnership requires you to give up control over some part of your business.
- You could potentially get involved with someone you don’t want to work with who is dishonest or has a bad reputation.
However, it’s important to keep in mind that all of the above can be mitigated by choosing a partner well and setting the right terms.
How JV Partnerships Work
The first step is to come up with a project idea. Review your business goals and decide what would help you get there. Then, go through your contacts looking for someone who would be a suitable JV partner.
If you don’t find anyone there, extend your search to social media, the internet, or offline events. Once you find someone, send them a proposal and if they accept, you’re ready to start creating your JV agreement.
Do you want to learn more about how to discover what it is your clients really want so you can create a great JV partnership? Check out my course, Market Research Mastery which teaches you a simple system for finding your ideal audience.