Arun Panchariya is an award-winning investment banker and advisor. His company has engaged in numerous joint ventures mostly with government institutions of different countries.
As you thought of expanding your business, you must have considering entering a joint venture in order to increase your business' success rate. A joint venture, if done successfully, can help you easily expand your business and boost profits. So, let's look into the steps that you need to take when you decided to enter a joint venture.
As you thought of expanding your business, you must have considering entering a joint venture in order to increase your business' success rate. A joint venture, if done successfully, can help you easily expand your business and boost profits. So, let's look into the steps that you need to take when you decided to enter a joint venture.
- Know the benefits and risks of a joint venture. Before you enter a joint venture you should know the benefits and risks that it entails. If your joint venture is successful, you may be able to have an access to new markets, share risks and costs with your partner and have access to better resources. Partnering with other businesses can be difficult as it will take a lot of your time and effort for it to work properly. Most of the time, problems arise when the level of expertise, investment and assets don't match, business cultures and management styles are not properly integrated and if the objectives of the joint venture are not met.
- Assess if your business is ready for a joint venture. As you enter in a joint venture it is important for you to keep in mind that a simple joint venture also represent a major change to your business. Taking some time to review your business strategy and conducting a SWOT analysis may help in assessing whether your business is fit for a joint venture or not. Revisiting your business strategy can help you in defining what you can realistically expect, while performing a SWOT analysis can help you in identifying the strengths and weaknesses that your potential partner should have, so that it would complement with the ones that you have.
- Look for a strategic partner. As you have already know, the partner that you should look for should have the resources, skills and assets that can complement your own. You should check if your potential partner is financially secure, have a credit problem or an existing joint partnership, business performance and their reputation from their customers and suppliers. Drawing up a legal document can help you in protecting your own interests, but before doing this, you should also investigate if your potential partner has any existing intellectual property rights agreement and other form of agreement with their employees or consultants.
- Create your joint venture agreement. When you have already chosen a partner, it is important for you to put your terms and conditions in a written agreement in order for you to avoid any misunderstanding once the joint venture is already in place. Aside from the joint venture agreement, you may also need other type of agreement such as confidentiality agreement to protect any business strategy or products that you may have.