Joint ventures and business partnerships
Is your business ready for a joint venture?
When businesses combine their skills and resources to achieve a shared goal, the outcome can be positive. However, joint ventures do not always succeed, so you should think carefully before entering one.
A joint venture will likely change how your business operates. To prepare, you should:
- have a clear reason for change
- align it with your existing business strategy
- choose the right partner and structure
- agree management, governance and decision processes early
- sufficiently plan for implementation, operations and exit contingencies
Careful planning and research are essential when making any changes to your business. See how to plan your joint venture relationship.
Review your business strategy
It's important to review your business strategy before committing to a joint venture. This should help you define what you can realistically expect. You might decide that there are better ways to achieve your business aims, perhaps through mergers and acquisitions.
Carry out a SWOT analysis
Before you enter into a joint venture, you should take some time to examine your own business performance. Be realistic about your business's strengths, weaknesses, opportunities and threats.
Consider performing a SWOT analysis to discover if the two businesses are a good fit. Seek a strong, credible partner that complements your own strengths and can contribute equally to the project.
Manage change in your business
You should take into account your employees' attitudes and bear in mind that people can feel threatened by a joint venture. It can also be difficult to build effective working relationships if your partner has a different way of doing things. It may help to follow best practices in change management.
Examples of successful joint ventures
You may also want to look at what other businesses are doing, particularly those that operate in similar markets to yours. Seeing how they use joint ventures could help you choose the best approach for your business. At the same time, you could try to identify the skills they apply to partner successfully.
You should weigh up joint venture advantages and disadvantages before entering any type of partnership structure.