Have you ever had a great business idea that you instantly dismissed because it requires resources or expertise from a different individual or company? You're not alone—and you shouldn't be afraid to admit it.

Whether you like it or not, some businesses need a collaborative mindset to succeed. You need to go outside your comfort zone, look at the industry as a whole, and ask yourself:

• Whom can I partner with to accomplish my business goal?
• Who is a good fit?
• What are the benefits and risks?

This is what a joint venture (JV) is all about.  It's an agreement between two companies to work together to achieve a certain business goal. Now that could be to attract new customers, enter into new markets, or help launch a new product, whatever.

So joint ventures can be really powerful in helping your small business to grow rapidly.

Now let's look at how to form a joint venture. The process you'll undertake to identify the right joint venture partners and how to put your plan into action.

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The types of joint venture relationships

Joint ventures come in two main forms:

1. Cooperate With Another Company With Limits

This is when you make an agreement to collaborate with another business with limits and specifications. For example, you’ve launched a promising product and a larger company would like to distribute it to a bigger market. You can agree to form a joint venture based on a contract.

2. Set Up A Separate Joint Venture Business

If you want to take things to the next level, you can create a separate joint venture business, where each party owns a percentage of shares and agree on how the business should run or operate.

Now how can you decide between the two? Start thinking of these things:

• What's your goal? Do you want to create a joint venture with limitations? Or are you open to flexibility?
• How much protection do you want for your business?
• How much money can you spend on building this relationship?

When making your decision, think about the pros and cons. What happens next if the venture is a major success? How about if it goes wrong? How much risk are you willing to take?

If you're still doubtful, don't rush things; seek legal advice from a professional. They will give you tips on how a joint venture can specifically affect your business, and how much profit can you gain or lose from it.

How to Start a Joint Venture? Our 10-Step Process

Step 1: Evaluate whether a joint venture is helpful for your business

Will it be helpful or are you just being impulsive in making decisions? Setting up a joint venture can make or break your business. You have to make sure that your decisions will drive business growth, and are not only driven by emotions.

Consider the following:

• Check what other businesses are doing. It's time to do some competitor research. How many of them are in a joint venture relationship? Is it helpful for them? Are they gaining traction? Did anything change when they teamed up with another business through a joint venture?
• Take a closer look within the business. Assess if a joint venture can fill the gaps of your business. Do you really need help from another business? Or can you re-strategize and fill the gaps on your own?

If you decide to set up a joint venture, it may help your business upscale and generate more profit.

Many huge corporations have joined forces with great success. For example:

• Ford and Toyota had a joint venture agreement in 2011 to produce and sell hybrid trucks on the market. Toyota took care of the production through hybrid technology, while Ford took care of advertising and promotion as one of the leading brands in the US.

• Microsoft and General Electric (GE) teamed up through a joint venture in 2011. They launched the Caradigm Project together, which aims to integrate Microsoft healthcare intelligence products with different GW health-related innovations.

• Samsung and Spotify also formed a joint venture together. In 2018, both parties had a deal to make Spotify more accessible to Samsung device users. A year later, they both decided to include Spotify as a pre-installed application on most Samsung phones, even giving new users a six-month subscription for free.

• Successwise, my company, teamed up with Systemology for a joint webinar. We sent invites to both of our lists to promote our certification programs. We each have very similar target audiences and almost everyone who needs Systemology’s services needs ours and vice versa.

Overall, joint ventures are created for win-win success.

Step 2: Choose the right joint venture partner.

Sure, you might think that forming a joint venture is a great idea. But really, it won't be beneficial if your business is not in the right hands.

Just like in any business relationship, both parties should be the right fit and aim for the same goal.

But let's say the market is saturated, and there's a whole bunch of businesses interested to work with you, how can you choose your JV partner?

First, you can start answering the questions:

• Who had your customers before you did?
• Which businesses or brands is your target market also interested in?
• Who's your ideal joint venture partner? (You can think of any popular business entity you want to work with.)

I suggest you focus on brainstorming your ideal JV partner. Basically, you want to collaborate with someone that has skills, experiences, resources, and assets that complement your own. Are there specific characteristics you're looking for?

Second, create a list of existing customers (who have their own businesses) and suppliers with whom you already have a long-term business relationship. You can also consider teaming up with your competitors or other associates.

Then, once you have finalized your list, answer these questions:

• What kind of reputation do they have?
• Do you share the same business objectives?
• How open are they to collaboration? And do they have the same level of commitment as yours?
• Are their core values aligned with your business?
• Can you trust them?

Third, if you want to go beyond the list, and are keen to work with a new potential partner, you can come up with a decision through these questions:

• What kind of reputation do they have?
• Do they already have existing joint venture partnerships?
• Do you have any idea about how they manage and run the business?
• Are they financially secure?
• Can you trust them?

Before getting into a deal, it's very important that you protect your business's interests. Sure, trust plays a big factor in this partnership, but you have to make sure they're worthy of your trust.

Step 3: Approach your potential joint venture partner.

Have you found your ideal JV partner yet?

Now, it's a matter of compatibility. You also need to do your part by showing your potential partner that a joint venture will be a great opportunity for both parties. Here are some tips on how to seal the deal.

Step 4: Grab their attention before making the proposal.

You don't need to wait until you're ready to make the proposal. Get their attention before you approach them.

Do you like their products? Buy some of them.

Are you interested in attending their free workshops and webinars? Sign up and participate.

Make them know that you exist without expecting anything in return. This is a great way to build a relationship, even before a joint venture takes place.

Step 5: Share some of your complimentary resources.

Let's say you've done your research and your potential JV partner lacks some resources that you can provide. If this is the case, go ahead and share your resources with them.

Step 6: Build Rapport.

If you're in the same industry as your potential joint venture partner, building rapport must be smooth and easy. It's a great common ground to start with.

As you initiate conversations, share relatable experiences and just be you. Think of yourself as an acquaintance who wants to get to know more about someone else.

Step 7: Leverage your assets.

Everything should start with some research. Find out what assets they don't have, and which ones are lacking. If your business has the capacity to provide them, make sure you leverage those assets to attract a possible JV partner.

Step 8: Personalize your pitch.

This is very important. Don't send a templated pitch or you won't get anything from your potential JV partner.

If you personalize your pitch, they know it's meant for them. They know that you took the time to get to know about them, and why it can be a great opportunity to join forces. Simply put, personalization gives you a better chance of closing the deal.

Talk about the potential partnership through their language. Mention areas in their business that need help, and prove why you're the right fit to support them. And just make sure that this partnership will be mutually beneficial.

Step 9: Draft your joint venture agreement.

Even if a written contract is not legally required to create a joint venture, I highly suggest you draft one. Just like any business transaction, it's important that the terms and conditions of your JV should be stated in a written joint venture agreement. This ensures that joint venture partners share the same level of commitment in the deal.

Now before anything else, you have to understand that your joint venture agreement should be drafted by a legal professional. You can find pre-templated joint venture agreements online, but it’s important that they’re tailored to your business. You need to consult experts.The draft for your joint venture agreement should include the following provisions:

• The business objectives of the joint venture
• The type of joint venture
• Each party's share or contribution to the joint venture
• Control and management of every joint venture party
• Details about how each party will share profits, losses, and liabilities
• How both parties will make use of intellectual property
• The role of the management and employees in the joint venture
• A confidentiality clause to protect certain commercial secrets of both joint venture parties
• Dispute mechanism between parties
• Procedures for termination of the joint venture
• Details outlining an exit strategy

Step 10: make the joint venture work.

If all the terms and conditions stated in the joint venture agreement are settled, it's time for the fun part. You need to know how to manage and handle the relationship.

Here are some tips for building a good joint venture relationship:

• Give your JV partner a great first impression. It's important that you get the relationship off to a good start. Show that you're reliable and willing to help in case there are any problems or issues with onboarding.
• Communicate with your JV partner. Communication is an essential part of every joint venture relationship. It's a no-brainer. Typically, you have to arrange regular, consistent meetings with business entities involved in the joint venture. Or at the very least, schedule regular virtual meetings if all the key people are working remotely.
• Be transparent. Do you want to know how to gain your JV partner's trust? Just be transparent. Be open to sharing information and resources that can make the joint venture successful. Be honest with what you're really trying to accomplish, and aim for the same goals. And if there are some internal issues within your company that may affect the joint venture, let your business partner know as soon as possible. The last thing you want to happen is to make yourself suspicious and lose their trust in you.
• Be open to changes. Whether you choose to cooperate with another company, it's still important to become flexible. Consider plans and suggestions from the other party that can improve the way the joint venture works—even if it means that you have to implement something new or unique.
• Be fair. Most importantly, be fair. There's no perfect joint venture. And I'm telling you, all partnerships can have conflicts. So if a conflict happens with your business partner, face it with fairness. Come up with win-win solutions instead of outdoing each other. Remember that joint ventures are mutually beneficial agreements. They're not only meant to please you or make you successful.

How to Maintain a Successful Joint Venture

A successful joint venture depends on different factors. But most importantly, everything boils down to the collaboration between two parties. You have to work as a team. Here are some helpful tips for success:

Step 1: Strive for clarity.

Make sure that all the goals and expectations of the joint venture are clear and agreed on by both parties. If there are any issues, discuss them with your JV partner.

Step 2: Balance contributions.

Everything should rely on the joint venture agreement. Always remember to balance all levels of investments and expertise contributed by both parties.

Step 3: Manage the joint venture.

By manage the joint venture we mean consider the company culture and management style of both parties. Entering into a joint venture can be challenging because no two businesses are the same. But it's important to find the common ground in terms of company culture and management style to make the venture successful.

Step 4: Provide support and leadership.

Whatever type of joint venture you choose, make sure you offer substantial support and leadership. It's always a give-and-take.

Make sure your team, and all business entities involved, fully understand what a joint venture is and how it works.

Be transparent with everyone involved in the deal. Allocate the right time to discuss the terms and conditions of the joint venture, how it will affect day-to-day operations and the end goal of the venture itself.

How to End a Joint Venture

For businesses who chose to cooperate with other businesses with limitations, joint ventures are expected to end especially when the goal is achieved or the project is finished.

But for those who chose to create separate joint venture businesses, there might be a few reasons why they have to be dissolved.

Some things change over time. A joint venture might become successful during its early stages, and end up unsuccessful due to consistent conflicts and unresolved issues. Whatever the reason is, if you decide that the deal won't work anymore, you can base your next step on the joint venture agreement. It's important that you know how to settle:

• Unbundling shared intellectual property
• Protecting business confidential information
• Settling who will be entitled to future profit from joint venture activities
• Identifying who will take charge of continuing liabilities

Dissolving a joint venture should be planned wisely. More importantly, aim for a friendly separation. Even if both parties are separating ways, you can still continue to trust each other and open any possibilities for potential collaborations.

Joint Ventures: A Tool for Win-Win Success

Joint ventures can be critical to your business's success. The resources, assets, skills, or knowledge of other businesses can help them scale, boost their reputation, and earn more profit.

On the flip side, there's also a possibility that it won't work for you. So as I wrap things up, I want you to be 100% sure of what you're entering into. Is your business prepared to enter a venture with another business? That's up to you to answer.

Make decisions wisely. Choose a type of joint venture that will benefit your business the most. Make sure to pick a JV partner that shares the same goals and vision as you.

And while the joint venture agreement is active, do your part to make the partnership work. Reach the goal with your business partner and it will become a tool for win-win success.