5 Strategies for Successful Joint Ventures by Nicole Desharnais

Clearly Define the Agreement Terms

It noises like a no-brainer, but this could be one of the much overlooked aspects of a JV. Make sure that everyone involved not only understands the principles of the agreement, but also understands the fine details, including goals, financial contributions, and human resources and expected entire deal. Having the scope of the project in writing helps protect both parties from the JV's potential failing or from litigation issues, and it in addition helps the joint venture reach targeted goals.

Pick a Structure

The business structure will depend on the scope of the task. If you team up with another business for a small-scale job, you probably don't have to form a new company. However, if both companies are focusing on a new technology or developing small business software destined for a wide-ranging market, it might be preferable to form a new entity so that both parties have shared possession.

Maintain Strategic Alignment

In all likelihood, each company in the JOINT VENTURE has different goals, challenges and shareholders. This can complicate strategic issues when product placement or earnings distribution arises. Not only should both sides recognize a specific process for making strategic decisions, nevertheless they should also regularly connect thoughts and ideas in relation to change.

Carefully Select Governance Protocol

With two companies making decisions, things can get complex, no matter how simple the project. You can avoid -- or at least minimize -- problems by establishing a governance policy that works for both equally factors (and get it in writing!). If each side has equal risk in the game, a balanced governance structure makes sense. But if one company owns more parts on the proverbial table than the other, some creative negotiation may be expected.

Always hire a company Attorney

Unless your buddy or your aunt is a business attorney, retain the services of your attorney well versed in JVs to view all documents and agreements. So many small details can derail a partnership, or even sink a business, particularly if missed by an inexperienced eye.

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