As a business owner, you want to make sure that you have a good share of the market in your industry. You want to make sure that you are able to penetrate the market well and be able to generate revenues. If you want to do all of these in a short amount of time, then maybe you should start considering joint ventures.
In this article, we would like to give you useful information about joint ventures. We also attached a few sample joint venture agreements that you might find useful when you have finalized the provisions and terms and conditions that you want to implement during the joint venture. So if you are ready to find out more, just continue reading this article.
Sample Deed of Joint Venture Agreement
Contractual Joint Venture Agreement
Joint Venture Partnership Agreement
Joint Venture Loan Agreement Example
Business Joint Venture Agreement in PDF
What Is the meaning of Joint Venture Agreement?
A joint venture agreement template is basically an agreement between two companies to come up with a new business identity that both would benefit from. It will include sharing of assets such as capital, employees, equipment, patents, and facilities available. This can occur between two big companies, two small business entities, or a bug company and a small company. Usually, companies will do this in the hopes that doing so will help to increase their market and beat other competitors in the same industry. Sometimes, this also happens when local procedures only allow certain target markets to be penetrated by a joint venture.
In cases where a big company ties up with a small business, this would usually occur in the hopes that the big company can acquire something of importance from the small company. It can either be intellectual property, technology, or resources deemed hard to attain.
Critical Questions to Answer When Planning a Joint Venture
When you find yourself starting to ask whether there is a need for you to start a joint venture or not, the answer would all depend on what you think is needed by your company. For a start, think about the following aspects of your business to ensure whether or not you are on the right path to making the right decision of doing a joint venture or otherwise.
- Think about who your target market is.
- Think about how you are able to reach your target market.
- Consider who your competitors are.
- Consider areas that can be penetrated without the need of partnering with local entities or without spending too much.
- Is there something that the other company already knows that your company has yet to develop?
- Do you think that a local business can help you reach a bigger and wider market?
- Do you have all the manpower you need?
- Is your current manpower complementary with the other company?
- Will combining resources make you feel more secure or uncomfortable?
- Is access to legal resources easy to ensure security and sustainability of a joint venture?
- Do you have to follow certain legal regulations when partnering with a local business? What can you bypass?
- Are there any joint venturers available for consultation?
- Are you ready to start developing a new business plan?
- Are you ready to cut down on your manpower in order to properly finance the new business identity of your joint venture?
- Will joint venturing help you escape your current business issues?
- Do you already have a company in mind when you think about joint venturing?
- Have you done an updated business SWOT analysis of your business?
- Is support readily available should push comes to shove with your new joint venture?
- Are you going through major business instabilities at the moment?
- Do you think that now is the right time to start a business venture?
These are just some of the questions that you should be asking yourself when you start thinking about a joint venture. When answering these questions, you have to make sure that you weigh the pros and cons before you proceed with joint venturing.
What Is the Difference between Joint Venture and Partnership?
As we have mentioned earlier, a joint venture is an agreement that two or more businesses get involved in for the purpose of coming up with a new and improved business entity. Parties involved with a joint venture come to an agreement that the profit and loss of the new enterprise are going to be shared in a fair manner. A partnership, on the other hand, is the association of two or more individuals to operate a business as co-owners. You can find more information about partnership agreements by reading our partnership agreement samples and templates article as this goes in-depth on how you can come up with a well-written partnership agreement.
There is not much difference between a joint venture and a partnership. In fact, a joint venture is actually considered as a form of partnership. However, there are also significant differences between the two.
- With joint ventures, it is companies that come into agreement whereas, in a partnership, individuals are the ones that come to an agreement.
- When it comes to partnerships, the co-owners aim to gain profit from their business. With partnerships, they do not just aim to gain profit but they are formed for specific purposes. Typically, companies would opt for joint ventures to gain something that the other company has that they do not and use it to benefit both companies.
- A joint venture is valid for a limited amount of time only whereas a partnership lasts way longer.
- A joint venture makes use of minimal amount of capital cost while a partnership may make use of more.
- While a joint venture is considered to be a form of partnership, it is a less formal relationship compared to an actual partnership.
Joint Venture Development Agreement
Apartment Joint Venture Agreement
Model Joint Venture Agreement Format
Nonprofit Joint Venture Agreement
Joint Venture Operating Agreement
Property Joint Venture Agreement
Advantages and Disadvantages of Joint Ventures
- You will gain new insights and new expertise. Joint ventures give you a chance to have a better understanding of the market even for just a short period of time.
- Gain better resources. Resources will include staff, technology, patents, and other intellectual property. This means that you will be able to save more capital or focus most of your capital more on the project that you have. This means that you will be able to save more money in the process especially when it comes to marketing and advertising. Check out marketing proposal samples and templates for more information regarding marketing company products.
- Commitment is temporary. This makes this arrangement flexible, and should you find that you are not satisfied with your short-term partnership with the other company, you can opt to not continue doing business with them once the agreement is up.
- Shared costs and risks. The costs of success and failure do not solely fall on your company. You share the costs with the other company.
- Separated assets. You will know what belongs to your company and rightfully claim these assets. You will also be able to sell these assets.
- Success is high. Since you have a partner who will fill in the resources that you need, you will be able to increase the success rate of your project.
- Network. Your network will expand. Despite the fact that this partnership is for short-term goals only, since you will be working with different kinds of people you will be able to expand your network.
- Increase potential. You will be able to create more ventures and deals in the future by going on a joint venture.
- Unclear objectives. A ton of times, people who venture in joint ventures do not have clear goals, which can be a big disadvantage.
- Unbalanced. Assets, investments, and expertise are greatly imbalanced when it comes to joint ventures. If you fail to come to a compromise with the other company regarding this, this will have a negative impact on your joint venture.
- Culture clash. Operation styles between companies may vary which can lead to a lot of misunderstandings.
- Planning and research are necessary. You might find that you need to put in a lot of time doing research and planning which can be a turn off especially if your time is already pretty limited.
- Hard to exit. Since there is an agreement contract, it can be a bit hard to exit the joint venture especially if you get tempted to leave it.
- Unclear communication. Because of unclear goals and a clash of cultures, communication can become unclear.
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