How to Set Up a Joint Venture (Part 1)
A joint venture can be very profitable for a business; it will allow you to pool your resources alongside another business to achieve a goal. This may be expansion, developing new products or moving into new markets. It can also mean imposing a more powerful market presence and business influence.
Indeed, an increase in resources, technical expertise and access to other markets can give you an edge that will enable a new spurt of growth. It will also allow this spurt at a much shorter time.
There are different types of joint ventures. You will have to identify what you would prefer and what will be best for your business.
A joint venture is different from a merger in that there is no transfer of ownership in the deal. One type of joint venture is to cooperate with another business in a limited or specific way. This may mean selling your product through another company’s distribution network. This means that if you have a new and exciting product –such as a film, you may choose to have a distribution company sell it through their established network.
Another type is when you want to set up a joint venture wherein a new company will handle a particular contract. You can also choose to form a business partnership or limited liability partnership. You may also choose to promote other businesses and expose them to your contacts. In all, there are many options to choose from that will work best for your business.
You will need legal advice. This is very important. It’s always best to draw up how the profits will be shared or taxed. If things go wrong, it will also provide you with an exit strategy.
How you execute your joint venture will be more important than the process itself. The next few steps to creating a joint venture will be tackled in the next article.
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