A Joint Venture or a Partnership is a business that is owned and operated by two or more parties. The partners share profit on an acceded basis.
They say two (or more) heads are better than one. For this article we will list down the main advantages of engaging in a joint business venture.
As opposed to a sole proprietorship, financial responsibility on a partnership isn’t entirely on one person. In fact you can engage in a business even without a capital if you are able to find a partner who finds potential in your idea.
But money and knowledge aren’t the only things that can be shared in a joint business venture. Partners can also pool other resources like technology, manpower, etc. One partner, for example, could have knowledge about LED technology and knows just how to efficiently employ a LED sign for your business, among other marketing strategies.
Cost- and risk-sharing
If money matters are divided by partners, so are the different risks that can be encountered by the business. Partners agree upon a specific ration that allows them to share profits and losses. By the same ratio, the risks are also borne by each partner.
Exposure to a wider market
By engaging in a partnership, you will have access to your partners’ customer database, effectively widening your market. These are people that are off your radar but could be looking for just what you have to offer. Imagine a single email would reach more potential customers, perhaps another demographic, but is surely part of your target market.
A joint venture has many other advantages. But there are reasons why other businessmen prefer to be on their own. In part two of this article it’s time to list down the disadvantages of engaging in a joint business venture.