Joint ventures can be a great way to strengthen your business. Partnering with another business on advertising specials, or aligning with a nonprofit to extend community outreach, for instance, can give you an edge in a competitive environment. If you don’t plan carefully, however, you may find your joint venture to be of little benefit, or an unwise use of your time and resources.
The Better Business Bureau offers the following tips to help you lay the proper groundwork for a successful partnership with another business, a not-for-profit, an industry association, local or state government agency or other entity.
- Define how a joint venture could benefit your business. What do you want to accomplish? What business, agency or organization could help? What could you bring to the table for your prospective partner?
- Select your potential partner with care. Choose someone you can trust, respect, and who has a stellar reputation. A successful partnership will permit the two parties to leverage one another’s strengths and diminish their respective weaknesses.
- Determine how closely tied together you want to be. The closer you are tied to the partner, the harder it will be to sever the relationship. Construct your venture in a manner that will permit you to maintain your independence, and achieve a quick and healthy closure when the venture ends.
- Create a plan that produces win-win results. Be clear about who your customers are, and what the products or services will be. Delineate the revenue and cost distributions. • Make sure your employees know how the new venture will work. If you solicit their input prior to finalizing the venture, they may be more likely to buy into the changes. Plus, they may offer ideas or factors you hadn’t considered.
- Keep open the flow of communication. Meet frequently with your partner to discuss how the joint venture is working, to make any needed adjustments, and to consider whether the efforts of both sides are balanced. Are contributions and results equal? Are the goals being met? Is everyone keeping his or her commitments?
Differences will no doubt arise. If you respect one another and have good communications, you should be able to successfully negotiate the rough areas. If not, contact your local BBB to locate a qualified facilitator or mediator.