This month, Business Support Specialist Heidi Green discusses joint ventures.
A joint venture is most commonly used to describe an agreement where two or more businesses create a separate joint venture business, however, any kind of collaborative work with another business could be described as a joint venture too.
It is a great chance to use each other’s strengths and compensate for any weaknesses and generally involves sharing resources and risks.
The benefit is that whilst entering into a contractual agreement you keep your independence as a business, the collaborative working is over a limited time span. You can of course create a totally separate joint venture company. You need strategy, strong partners, equal contribution and to be able to work well with each other.
Issues to consider should include (but not be limited to) how it will be financed and what happens if further funding is needed, how it will be managed, what and how often is information reported, how will profits be shared, who owns any intellectual property, how will disputes be resolved and an exit strategy.
Of course there are risks and a number of joint ventures fail as sometimes they cannot integrate operations or working cultures. Communication regarding objectives and during the execution of the contract is essential. As well as your own requirements you will need to consider what your partner will be hoping to achieve from the venture. Strong leadership from the partners from the very start is essential.
Seek advice from professionals to make sure you all have a clear understanding of the objectives and who is responsible for what.
For help and advice, contact Heidi Green, Senior Business Advisor for Selby District Council via email at firstname.lastname@example.org or 01757 292332.