Should I start a joint venture?There is no straight answer to this question. The decision involves addressing various elements. Consider copying the following questions on a word processing document, so that you can constantly address and answer those important elements before and as you move forward.
Important questions to consider:
NOTE: A free template is available at http://HappyAbout.info/jointventuring
- What do I sell, and how do I reach my target market?
- Who are my competitors? If they are better at generating revenues and reaching the marketplace than me, what do they have that I don't?
- Are there geographical areas that will remain beyond reach without local partners, or acquisition costs that are simply too high?
- Do I need to develop a know-how, which has already been developed by a company or by an individual?
- Is there a logical business partner that could help me develop a vertical or horizontal market penetration?
- Do I have all the human resources I need in marketing, R&D, production, or operations? Is there a company I know which would have resources complementary to mine?
- How do I feel about combining resources? Do I like to lead by myself and act as a solitary business hero, or am I fine with sharing the pie? Do I think it is better to own 20% of a $200 million company or 100% of a $1 million small business?
- Do I have access to the right legal resources to structure the joint venture and insure all aspects are duly covered?
- Are there local legal regulations I can bypass by partnering with a local business?
- Do I have access to successful joint venturers who can share their experience with me?
- Do I understand that going through the decision process entails sitting down and taking the time to write a full-fledged joint business plan?
- Am I aware that in the vast majority of cases, merging activities, even when not necessarily identical, will result in an inevitable workforce reduction? How do I feel about letting go of some of my most faithful employees?
- Am I looking at partnering because I don't see another way out of my current business problems? (Joint venturing should not be considered as a last resort action, but rather as one course of action among several others. This decision needs to be taken in a careful and methodical manner.)
- Do I already know of a person or a company that I see has a real interest in partnering? Have I discussed this possibility with this person or with the person in charge of the targeted company? If yes, what is the general feeling? If no, then it is time to start a high-level discussion to gauge the level of interest.
- Is my company in need of more credibility? Do I know of a potential joint venture target, which has the level of credibility I am seeking?
- What are my strengths and weaknesses? What are the threats and opportunities in my target market?
- Do I have all the support I need to go through this major change in my business life? If I am going through personal turbulences, does it make sense to start such a major project?
- What are my chances of success?