How Good or Bad Is the Idea of Having Joint Business Ventures

For those planning to start their own business, getting into a joint business venture is an attractive option. In a joint venture, there are two or more companies or even individuals who join together in at least a temporary partnership. What these businessmen do is put their resources together to accomplish a common goal, which is to earn profit. Joint ventures are actually very common because of the benefits they come with. But there are some drawbacks to this type of business setup as well. Before entering an agreement of this kind, it is better to learn about its advantages and disadvantages first.

Advantages of Joint Business Ventures

Variety of Skill Sets A joint venture lets different people or companies offer the unique skills they’ve got. In many cases, those who engage in joint partnerships aim to get access to different skills, business knowledge, and even new technology. If you are into clothing business, for instance, you may want to consider selling shoes as well. In this case, you can start a joint venture with an established shoe company who will share with you their expertise and the technology that will help you penetrate another market.

Access to Different or Bigger Markets If you want to expand your current business, you can do so by gaining access to a new market. This is possible through launching a joint partnership with another business that has a big market. Having this type of business relationship, both you and your partner will gain access to different markets, which means bigger opportunities to make money.

Shared Risk
Because you will be combining your resources with another party’s resources in a joint venture, both of you will face the same risks. What makes this beneficial for you is that you wouldn’t have to worry about losing everything that only you have invested. This is a smart choice especially if you are interested in investing in risky transactions.

Disadvantages of Joint Ventures

Shared Power When it comes to making business decisions, joint ventures allow all parties involved to have a say. This way, there will be no decision to be made that will be contrary to what any one of the partners want. In short, you will not have the final word on the different issues the company is facing because your partners also have the same power as you.

Smaller Rewards
Of course, you will have to share the rewards with your business partners. Since you and your partner will be investing an equal amount of money or resources, all the profits the company earns will be divided equally to the two of you. So you should expect smaller profits compared to the business you solely own and run.

Conflict Resulting from Differences
Since you and your partner will have different beliefs, culture and business style, there is always a possibility for both of you to disagree with each other. If left unaddressed, such conflicts may lead to the failure of the business. Nevertheless, working with a business mentoring specialist can help you deal with such issues with your business partners.