Benefits of Joint Ventures – Diversify Increase Sustainable Business Cash FlowsJuly 23, 2012
Businesses in accounting and financial services of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects
A joint venture can help your business grow faster, increase productivity and generate greater profits. A successful joint venture can offer:
access to new markets and distribution networks
sharing of risks and costs with a partner
access to greater resources, including specialised staff, technology and finance
Joint ventures often enable growth without having to borrow funds or look for outside investors. You may be able to use your joint venture partner’s customer database to market your product, or offer your partner’s services and products to your existing customers. Joint venture partners also benefit from being able to join forces in purchasing, research and development.
A joint venture can also be very flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting the commitment for both parties and the business’ exposure.
Joint ventures are especially popular with businesses in the transport and travel industries that operate in different countries.
The risks of joint ventures
Partnering with another business can be complex. It takes time and effort to build the right relationship. Problems are likely to arise if:
the objectives of the venture are not totally clear and communicated to everyone involved
the partners have different objectives for the joint venture
there is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners
different cultures and management styles result in poor integration and co-operation
the partners don’t provide sufficient leadership and support in the early stages
Success in a joint venture depends on thorough research and analysis of aims and objectives. This should be followed up with effective communication of the business plan to everyone involved.
(Source Business Link – http://www.businesslink.gov.uk )