One thing I am learning as I take this adventure in starting my new business is that strong relationships are important to succeed. Building good relationships with other business owners is key to being happy and successful in your business life. To build such relationships the key ingredient is networking and passing out your business cards. Do not be afraid to move out of your comfort zone and meet new individuals who can play a valuable role in the growth of your business. Also, remember it is good to go alone to certain business events without a wingman. Sometimes it is good to go solo because you are able to think outside of the box and you learn to get out of your comfort zone. Life is too short to just sit around and wait for customers to come to you, you must go out and get the customers.
There are many partnerships that you can form with other business owners to promote and grow your business. You can set-up a corporation, limited liability partnership, limited liability company, limited partnership, joint ventures, etc. I find the most effective type of partnership to set-up when starting your business is a joint venture partnership. A joint venture is essentially a one-time or limited-purpose partnership. It can even be thought of as a trial partnership, because sometimes successful joint ventures lead to a full-scale partnerships. With joint ventures, you link up to act as one entity on a given project. Joint ventures require all parties involved to head out together arm in arm, sharing full responsibility from start to finish for whatever happens. Such partnerships are limited to a single event or activity.
Legally, joint ventures are considered partnerships and you are in business together with the other parties. Also, it is advisable to have a written agreement spelling out how the joint venture will function, the role of each partner, when the partnership will end, and spell out the financial issues very clearly. Each partner should be very clear as to their role in the joint venture and what to expect from the partnership.
When joint ventures can be beneficial to your business. When you are presented with a unique opportunity you can pursue only by teaming up in a particular way. When you can create a new opportunity outside the normal sphere of your operations. When you want to explore an opportunity without risking all your resources. When you have an idea or invention that could be developed or applied to another field but you don’t have the contacts or resources needed.
Basic tips for an effective joint venture. Keep your joint venture in perspective. Clearly define and focus on the goals for your joint venture. Be sure you trust and respect your joint venture partners. Put all your agreements in writing. A joint venture can be a productive way to test the waters before entering into full-scale partnership. You can have most of the benefits of a partnership without many risks. A joint venture can open doors previously closed to you alone. You can boost your reputation by associating with your joint venture partners.
But, joint ventures can have setbacks as well, so be very careful who you agree to do business with. Also, always do your research before entering into a joint venture. Usually, you are truly interdependent in a joint venture. You must depend on someone else to accomplish the joint goals. This added vulnerability creates greater potential for conflicts, disappointments, and disagreements. You’re legally liable for the actions of your joint venture partner. To protect your legal and financial interests, you need to get all joint venture agreements in writing. This can take time and energy and add complications to your life. The joint venture can drain time, energy, and money from your primary business. It’s harder to back out if things don’t work out because others are dependent on you and you’re legally liable for whatever you’ve jointly contracted to do.
Joint ventures can be very useful tools in creating good business connections, good networking tool, open doors to get new customers, good way to advertise your business, and relieves stress of running a business on your own.
Source: Teaming Up: The Small Business Guide to Collaborating with Others to Boost Your Earnings and Expand Your Horizons by Paul and Sarah Edwards with Rick Benzel (G.P. Putnam’s Sons, 1997).
Donya Zimmerman is a business consultant, mediator, and legal professional with over ten years of experience. She is owner of Family & Community Mediation and Business Consulting (FACMBC) based in Baltimore, Maryland and has been in business since 2013. Services provided by FACMBC: Mediation and Conflict Resolution Services; Business Registration Assistance (Limited Liability Company, Corporation, S-Corp, Limited Liability Partnership, etc.); Business Plan Drafting Assistance; Business Certification Assistance (MBE, WOSB, 8A, 501(c) (3), Hub Zone, etc.); and Business Organization Assistance.