What Are the Best Tips for Beginning a New Joint Venture?

Starting a new joint venture can be exciting, with endless possibilities stretching ahead. Letting the excitement override necessary business self-preservation, however, can doom any partnership. As such, the best tips for starting a new joint venture start with the planning stage. Forming an alliance with a business that shares similar values, establishing good communications, and clearly understanding expectations are considerations to address long before negotiating a new joint venture agreement. Such areas of consideration make the negotiation process easier and written agreements clearer.

Partnerships, whether formed between two individuals or two organizations, take time to develop into a solid working relationship. To help the process, it is important to ensure both companies share similar core values. Organizational culture, leadership, and business ethics should easily blend in order for both organizations to realize the best outcome regarding a new joint venture. Internal conflict, high employee attrition, poor reputation, and unethical practices on the part of one organization will reflect poorly on the other. Likewise, a clash of personalities or corporate cultures can create stress in a partnership.

In a joint venture, both parties are looking for something their organization cannot provide for itself. For example, a vacuum cleaner manufacturer may not have a presence in the automotive market. An automotive manufacturer may be looking for accessories to market for add-on sales. Together, these two companies offer something the other needs, such as access to a market or a new product to offer customers. The only way these two organizations can have a successful new joint venture is to clearly establish what each wants, needs, and expects from the other.

Good communication between organizations helps establish both trust and clear expectations. Every aspect of the partnership should be discussed at length. Each partner in a new joint venture should communicate how they see the partnership functioning or where they see potential risks. Consistency, fairness, honesty, and openly discussed expectations are key to establishing trust between two organizations. When both parties openly communicate expected gains and expected returns, each organization can make the most informed decisions before proceeding.

Everything being satisfactory regarding prior recommendations, one last tip for a successful new joint venture remains. Written agreements are a must for a any partnership, including a new joint venture. Provided each organization has performed due diligence on the other, good communications and trust are established, and each party is aware of their responsibilities, negotiating a written agreement should not be difficult. The interests of both parties should be fairly represented in the agreement so that neither organization gains more than the other, lest resentment brew and ruin the partnership.