How to Form a Profitable Joint Venture

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Forming  a Profitable Joint Venture

Some people in the business world know that there is power in forming a potentially profitable joint venture.

In order to do this, it’s important that the parties to the joint venture work out the details in writing, up front. In his article, “How Do I Make A Joint Venture Work?,” Keith Lamb, a Leadership and Strategy Mentor, stated “We look for joint venture partners that have complementary products and services and share our business goals and motivations.” He stated that the agreement must include a specific start-up strategy; along with details about investments, goals, plans, joint marketing and sales efforts.

One other factor that Lamb mentioned was the importance of creating a profitable joint venture that will better serve customers. That’s what Joint Venturers Physical Therapy and Fitness did. These therapists realized that customers could be best served with a dedicated physical therapist who they could see in person; along with a personal trainer, sports chiropractor, massage therapist, nutritional counsellor, acupuncturist and yoga specialists all under one roof. They found value in having an integrated or multidisciplinary platform from which to treat patients in one place.

Sharing Strengths and building Wealth

The next key to success is to team with another company that brings a similar benefit to the table. Since parties to joint ventures (JV) are to share strengths and be stronger and more profitable as a result of the joint venture, it’s important to consider who to partner with. By definition, the assets, revenues and expenses of each participant should be shared in a joint venture.

Companies that use Joint Ventures to increase earnings

According to The Dow Company, they use joint ventures to strengthen their earnings portfolio. In fact, they indicate that 90% of their total equity earnings come from joint ventures. On their website it reads, “Joint ventures can provide Dow with access to capital, geographic markets, synergy opportunities, risk sharing, technology and advantaged raw materials.” They also list Dow Corning Corporation as an example of one of their joint ventures. As you explore this specific joint venture agreement, you find that they have a 50%-50% arrangement and a description of their company as a silicone solutions/product venture.

Future Plans

Join us on Thursday for the second part of: How to Form a Profitable Joint Venture.

Foodie Insights

Just to let you know that the February foodie photos as featured in our Food Resource Gallery will be out on Friday 6th February.