Joint Ventures

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Joint Venture Benefits

Let’s say you have a business.  And you have a great idea for a new business OR a new project.  But perhaps you don’t have all the skills necessary, the market connections, enough cash on hand to fund it or time to execute this new idea.  What a pity!  Especially if you’ve run the numbers and the idea is profitable, it supports your existing business development, and it has a reasonable level of risk.

Wait.  Consider expanding your concept to include a complimentary company, even a very big one, by creating a Joint Venture. JVs are not just for big companies.  Smaller companies can profit from them, too.

A giant construction company creates a Joint Venture with a smaller construction company when the smaller company is headquartered in the town where the big project will be built and the owner knows the prospective client from previous jobs.  The smaller company can’t win the project alone because they are too small, and the bigger company can’t win the project alone because they aren’t local or connected.  BINGO:  A Joint Venture gives both companies a much better opportunity to win the business!

Everyone is talking about the Mediterranean Diet now that a study has shown dramatic evidence that it can reduce your risk of heart problems.  This is a good time for companies that grow and sell the ingredients of the diet to create JVs with companies that cook them, serve them and distribute them.  Mary’s Farm could create a JV with Tony’s Markets, Bob’s Catering and Jane’s Delivery Service to sell a new label:  “Mediterranean Diet To Your Door.”  All four businesses can benefit without developing skills outside their comfort zone.

A technology firm specializing in government contracting knows the government systems and processes.  That company may want to expand into the commercial market after the recent government spending cutbacks take place.  One option would be to find a complimentary technology company that does only commercial work, and wants to sell to new prospects that do other work for the government.  In this case, one partner knows government systems and processes and the other has the commercial markets experience.  A joint venture for that specific market would help both partners.

My consulting business, Entrepology, recently formed our first Joint Venture with a complimentary firm.  As soon as it launches, I’ll tell you more about it and the lessons learned.  Note that forming a JV is much easier than forming a new business.  Create a Joint Venture agreement, and then develop a plan to benefit both partners and create a great success!

All the best!

Amanda

 

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