Joining A Joint Venture: What To Look For In A Partner
Financial support is also a great benefit; entering a market or a introducing/producing a new product can cost quite a bit of money and spreading out the cost between two or more sponsors can make sure that the losses aren't catastrophic if it falls through.
As can be seen, forming a joint venture can be very profitable for a company. The thing is, for a partnership like this to prosper, you need to have a good partner. Having a partner that doesn't pick up his part of the burden is even more of a liability than going it alone and a partner that is actively sabotaging your business relationship, whether intentionally or unintentionally, can be a tremendous problem for a company.
This is why it's important to screen your prospective partners. So what should you be looking for in a potential partner?
First of all, the company needs to have strong leadership. A solid hand on the keel can help integration between two companies be a lot easier. Indecisive leadership or an unclear chain of command can cause problems like conflicting orders or lax discipline that can spell disaster for your partnership. Always do a background check of the head of the company for possible problems personality conflicts.
Secondly, take a long look at the other company's corporate culture. A lot of potential problems can crop up when your company's laid-back style clashes with a the fast-paced one of your partner's. Your employees will be interacting and mingling with each other and creating a good rapport between them will be important. Envy and jealousy can throw a monkeywrench into this – not to mention expectations may not be met on both sides. Try to adjust or choose a more appropriate partner for your company.
Thirdly, the business side comes into play – draw up a list of what you need your partner to do. If you're looking for a distribution arm, check your prospective partner's market penetration and capabilities on delivering the product. If you're looking for R&D, look at the company's track record on developing technology. Always have a set idea of what you want, that way you won't be disappointed when you're looking for your partner to deliver the goods.
A company's track record is usually public record for the shareholders' benefit and if not, it's child's play to have a background check done on a company.
When you think about it, all of these can be summarized into one sentece: know who you're going into business with. Knowledge is power and that's the key to becoming successful in a joint venture.
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