Plan your joint venture relationship

Before starting a joint venture, both businesses need to understand what they each want from the relationship.

Issues to consider when planning a joint venture

Normally, you will want to find a partner who is compatible with your business. This partner can be:

• a larger business, offering resources such as distribution networks, specialist staff and finance
• a smaller business, offering flexibility, innovation or access to new products or intellectual property
• a supplier, offering technical knowledge or improved services in return for agreed sales

Think about what both you and your partner want from the venture. You should agree on shared objectives that benefit both sides.
You will need to agree key details, such as:

• the structure of your joint venture
• who will manage the venture and how
• who will finance the venture and how
• the assets and resources you will both contribute
• who will own any intellectual property that comes out of the venture
• how you will share profits and any potential losses
• how you will handle any potential disputes

See how to create a joint venture agreement.

It's important to keep in mind from the start that joint ventures are generally temporary arrangements, and that they normally end when the objectives of the venture are met. You should plan your exit strategy from the beginning, to make sure you get a return on your investment in the joint venture.

Strategy for a mutually beneficial joint venture

Whatever your business aims, the arrangement needs to be fair to both parties. Any deal should:

• recognise what you each contribute
• ensure that you both understand what the agreement is expected to achieve
• set realistic expectations and allow success to be measured

The objectives you agree on should be turned into a working relationship that encourages teamwork and trust.