We’ve talked in earlier blogs about how you’re going to focus on your specialization and how you’re going to have to use a team of people to get to a higher level in your business. http://www.mcbrideforbusiness.com/blog/revving-up-your-business-by-building-your-team/ Now, for a lot of businesses, one of the biggest struggles is to maneuver through these steps, particularly when you have a one-owner operation. How do you get from having one owner to having multiple owners, and at the same time, building a bigger business without hiring anyone (which can throw the economics of the business off completely)? One answer is to use joint ventures. You may ask, what does a joint venture look like? We are here to help you with this intermediate step in your business. You simply find someone who has a complimentary skill or ability that may be different from yours – and you pair up. You bring both businesses together for that limited purpose. One of you does one thing and another person adds another skill to enhance the business.
As an example, some joint ventures we’ve seen might include two accountants, where one accountant has a specialty of dealing with financial statements and financial planning, and the other accountant deals with tax issues.
In a joint venture structure, they can both share a client base and help their clients even more by using their area of expertise. This strategy can build bigger businesses for both businesses. This is a good alternative to joining forces, as in a merger, if you’re not ready to go in that direction. Here, each party takes a viable small step towards working together and receiving some benefits without taking the full step.
Joint venture can also bring marketing alliances. Perhaps one person has a great product or idea, and another person has a deep bench of contacts who might be purchasers. Here, an economic arrangement could be made where each party will do part of the work, and both parties will get some economic benefit. Each party wins, and that’s the beauty of it.
Joint venture actually plants the seeds of specialization, without having to build an entire organization. That’s an often un-thought of benefit to doing a joint venture structure. You’re moving in the direction of economic specialization (towards the focus that we’ve talked about in other articles), but without having to take such a big economic step.
Joint ventures aren’t without risks. I recommend that if you do consider a joint venture structure that you speak to an experienced legal counsel, to make sure that your joint venture is properly documented and that you understand the inherent risks involved.
What have you done in the joint venture space? What successful joint ventures have you seen? What issues have prevented you from engaging in a joint venture? Let us know in the comments below, we’d love to hear from you.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.
About the Author
Shawn McBride is the Chief Innovation Officer at McBride For Business, LLC. He is a frequent speaker at events. His signature keynote, The 3 Laws of Empowerment, gives audiences an entertaining look at how they can prepare, plan and protect themselves. You can reach R. Shawn McBride at firstname.lastname@example.org or (214) 418-0258.
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