Companies often form joint ventures with one another for their mutual benefit. These business partnerships boost available capital for investment, making each group financially stronger. Further, joint ventures also eliminate the uncertainty inherent in all business ventures by sharing risks across all participants. This reduces the financial fallout for any individual company if the collaboration fails to produce profits.
You can maximize the chances of success with a joint venture by following these few tips.
Prior to starting your joint venture, clarify your business goals and values. You can use this as a guide to help find and partner with other entrepreneurs that share similar viewpoints. Consider finding companies with complementary products and services that share your strategies and motivations.
Give preference to joint venture partners with experience of collaborating with other businesses. Contact the companies your candidate has had alliances with to find out how the partnership worked out. Use the information you receive to evaluate whether the joint venture partner you are considering can help you to succeed.
Clear Agreement Terms
With the help of an experienced lawyer, draw a joint venture contract that anticipates the situations you and your partners may face and how you will resolve them. Your partnership agreement should at a minimum address overcoming conflicts and the measures to dissolve a partnership, as well as how much cash each partner is to contribute.
Protecting Intellectual Property
An important part of doing business may involve sharing trade secrets between your company and a joint venture partner. Ask a lawyer to help you come up with an agreement that prohibits your partner from sharing your intellectual property even after your relationship is dissolved. This type of contract is called a non-disclosure, or confidentiality, agreement. Besides trade secrets, it protects the details of technical designs, business plans, customer lists, as well as math and chemical formulas.