Few Tips on how the Joint Ventures Can Grow Your Company or Local Business
If you are one of many people recently displaced by downsizing and you need to start your own business to get your finances and career back on track, or the manager of a micro-business bogged down in administrative issues that stifle innovation and growth, you don’t need a list of obstacles that prevent you from growing your local business.
Instead, you need a solution.
You need a no-nonsense solution for how to make your business plan a success.
And, unless you’re capable of doing everything yourself, then you’ll need one or more partners.
I am sure many of you have considered a partnership during the time you were thinking about what type of business to start with.
Think of it this way: a general partnership is like a marriage.
Once you sign on, you’re responsible, for better or for worse, for everything your partner does until you get a divorce. And ending a general partnership can be as difficult as a contested divorce.
What if you just want to go on an exciting vacation with that special someone? Would you think that you need to get married first?
Probably not.
The same is true for your business, large or small.
To achieve innovation and growth in pretty much any kind and size of the business, adopt a less is more mindset, and give your plan the power that comes from focus without boat anchors.
A new business idea doesn’t need a complex business structure, but every new business does need:
- A clearly written plan stating what will be done, who will do it and when it will be done;
- Adequate shared resources;
- Sound decision-making; and
- Effective marketing.
This is the profile of a healthy joint venture.
In legal terms, a joint venture is defined as a written agreement between two or more people or entities to share resources to do a specific project, for a defined period of time, with shared control.
Again, regardless if we talk about a small, local business or a large corporation.
Let’s say you just went through the frustrating ordeal of figuring out how to buy the right smartphone and equipment for you.
You decide there’s a need for smartphone information and personalized phone holders. You might consider a joint venture agreement with a smartphone dealer who has an existing retail location and customer list.
You could draw up a simple agreement to test the market for a year, supported by the retail location to hold classes, create teaching tools and share revenue from the classes and resulting purchases of smartphones and your personalized holders, with partnership liability limited to this project.
This joint venture agreement would reduce the likelihood of disagreements because you both have a clear understanding of the limitations of the partnership.
Once the year-long test market is over, you and your joint venture partner can decide if the relationship should continue.
There should be no ugly divorce that often occurs when a general partnership falls apart.
In the micro-business context, if you have a plan to expand your product or service line, you may want to negotiate a joint venture agreement with someone who has the expertise you need instead of hiring an employee.
The joint venture partner will share your goal and have a stake in the outcome, adding to the innovation energy and profit.
A joint venture agreement can avoid administrative obstacles to growth and provide protection from claims that can arise in the employer-employee context. Clearly, this is more fair and realistic than hiring someone as an independent contractor or part-time employee.
Having given you a sense of how a joint venture agreement might help you grow your big or small business, I will follow my own advice that less is more and wish you the very best.
If you have any questions or experiences with small businesses turned and succeeded as joint ventures, please share them in the comments below.
Originally published at https://hubpages.com on March 14, 2020.
