Joint venture your way to the top

Joint Venture Your Way to the Top

Copyright (c) 2008 Christian Fea

Joint ventures are a great way to team up with another company or person who is looking to achieve similar goals. By using your resources in a joint venture arrangement, you can save time and money in achieving your dreams. Before you set up your joint venture arrangement, decide what exactly it is that you want to accomplish from the project. Are you looking to access additional information and resources, do you want to tap into new markets that your potential joint venture partner is already tapped in to, are you looking to extend your marketing reach? What is it that you hope to accomplish? By having a defined target at which to aim, you are more likely to hit the “bulls-eye” and create a winning joint venture plan.

Joint venture vs. partnership: Benefits

Because the main difference between a joint venture and a partnership is that a joint venture is normally temporary or project based, there are tax advantages that can be realized. First, each member of the joint venture retains ownership of his or her property. Secondly, members of joint ventures are taxed on the joint venture profits according to whatever business structure has been established for each business. Also, those participating in a joint venture can choose to use as much or as little of their Capital Cost Allowance (CCA) claim as they would like.

Let’s use an example of an inventor looking to bring an innovative product to market. Normally, an inventor will not have the resources and distribution channels needed to mass-produce his product. Thinking creatively, the inventor decides to research manufacturing companies with capabilities he believes are needed to produce his product. By joint venturing with the manufacturing company, the inventor now has access to additional funds, production resources, and distribution channels that could take months or even years to develop on his own. The manufacturing company has acquired a new product to provide to its existing and potential customer base, thereby potentially creating an additional stream of revenue. However, both parties have retained their autonomy in regards to how the profit share is utilized on behalf of each joint venture entity.

Joint venturing your company

Suppose you don’t have a great new invention to bring to market. Say your company is service-oriented, providing consulting services to the small business sector. Your dilemma is reaching gaining greater market exposure to your target market. How can you accomplish this without spending an arm and a leg on advertising? How about joint venturing with a bank or credit union that is currently servicing your target market? They may be able to offer your services as a resource that will help the businesses they are financing to succeed. Naturally, the bank is interested in the success of the businesses they’re funding, and a part of a successful business is a great marketing strategy. You reach a broader target market, the bank assists the businesses in which it has a vested interest, and you both retain autonomy.

There are a myriad of joint venture opportunities available. You can joint venture your way to the top if you’re willing to think outside the box, outline specific goals for your joint venture agreement, and follow through on the execution.

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