Simple Steps For A Joint Venture Agreement

When you want to take advantage of a leading marketing tool to grow your business

and increase your profits, a joint venture agreement is a way to form a strategic alliance that provides your company with additional resources and expertise. Most businesses will consider a joint venture agreement because they gain increased distribution channels, technology, financing, or advertising advantages that can lower costs and increase profits for both companies.

When forming a joint venture agreement, you need to pick your partners carefully because a bad choice is worse than going it on your own. The main reasons that joint ventures fail are poor or unclear leadership roles, cultural differences or poor integration of the partners. Once you have found a suitable partner that can benefit your business and that you can offer benefit to, you are ready to consider other factors for your joint venture agreement.

To reach a joint venture agreement, you need to have a blueprint for how the joint venture company will work. You need to use your knowledge and take action, use salesmanship, good communication and negotiating skills to reach a joint venture agreement. There are business consultants that specialize in bringing strategic alliances together, but you can reach your own joint venture agreement, if you understand what it takes to make a successful joint venture.

When you have resources to offer another business partner, you can negotiate a joint venture agreement. Just because you may not have the distribution or technology resources, email list or capital to offer doesn't mean you can't bring other valuable resources like expertise, talent or an exclusive product right to the joint venture. There are successful joint venture agreement companies formed everyday and typically, one partner is stronger than the other in certain areas.

A good case in point is that Toshiba develops strategic alliances with a variety of partners for different technologies they develop. They believe in the strength that a joint venture agreement can bring, when it comes to the principle of two small hinges can form enough leverage to open a large door. They have successfully used a joint venture agreement to be successful in many endeavors using the strength of other partners, both large and small.

Once you have settled on potential joint venture partners, it is a good time to write down the attributes you will bring to the partnership and be prepared to sell the benefits that a joint venture agreement will offer your business and the partnering business. Most joint venture companies are formed for a relatively short-term, (5 to 7 years), but the commitment to increased profitability is the primary reason that most companies will enter a joint venture agreement. It allows for higher profitability and lower expenses for both companies.

by: Scott Letourneau

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