Types of joint venture How you set up a joint venture depends on what you are trying to achieve. One option is to agree to co-operate with another business in a limited and specific way.
In fact, many large companies now rely on partnering up with other companies, especially smaller ones, as a way to innovate by outsourcing their research and development efforts.
The way you will win is to get to market fast and hit hard by collaborating with others. Before you do, however, consider these tips on how to make sure a joint venture makes sense for your business.
Evaluating a Joint Venture: Define Your Terms The term joint venture is often intermingled with a similar concept, called strategic alliance; however, they really are two different kinds of relationships, says Christopher D. McDemus likes to distinguish the two by defining a joint venture as a relationship where two or business plan joint venture proposal parties work together to achieve some end where the sum of their efforts becomes greater than its parts.
A strategic alliance, on the other hand, is a relationship where the parties aren't necessarily working in concert, but still benefit from each other's efforts. An example of a classic joint venture, says McDemus, would be where one company builds a technology used by astronauts on the space shuttle, say an exo-skeleton that astronauts use to lift heavy items in space.
As a way to expand the market for its suits, this company could form a joint venture with another company that might have significant experience selling items to the military, which might be interested in the exo-suit technology for its soldiers.
Under a joint venture structure, these companies could be out selling their product in months. What Is a Joint Venture? Evaluate Your Potential Partner s Another of the first steps you should take in deciding on whether or not a joint venture makes sense for your company is to do some due diligence on your partner, says Chesbrough.
You should also make sure that you and your potential partner have similar goals with the joint venture to ensure that a bigger company or one based overseas, for example, doesn't have a goal of becoming a competitor of your core business in the long run. Evaluate the Business Potential Just because some company wants to partner with you, and they have name recognition or customers, doesn't mean they are right for you, says Rebel Brown, a veteran business consultant and author of the book, Defy Gravity.
And there would be no real benefit to your business. Brown also suggests asking yourself what things you might no longer be able to do because of the joint venture, since there is always an opportunity cost.
So if the deal doesn't further your company's mission, passing on it may be the right move. Choose Your Structure If you decide that a joint venture will indeed be a net positive for your company, McDemus says there are two ways to structure it: Either by contract or by creating a separate entity.
And the first step each company should take is to write down exactly what it hopes to get out of this relationship and what it plans on putting into it. For example, if both parties are contributing assets to the joint venture and the hope is that the new entity is going to take those assets and develop a brand new technology, then it might be important to form the joint venture using a new entity that both companies own.
If, on the other hand, you and your partner just want to work together on, say, on a single project over the holidays, then a contract-based approach might work best. Hire An Experienced Lawyer Regardless of the kind of structure you choose for your joint venture, you'll want to hire an attorney experienced in putting together such deals.
You don't want your attorney to learn on your nickel. It might cost you more per hour, but it's well worth the investment. Decide on an Operational Goal Partners in a joint venture often see themselves as equals, where everything is dividedsays McDemus.
That creates problems, though, if the company needs to make a decision and both parties don't see eye-to-eye. Similarly, both parties should work out a clear capital contribution plan, which clarifies both who invested what and who is required to put additional cash into the venture moving forward.
Nail Down Intellectual Property Issues From the Get-Go If the companies participating in the joint venture contribute assets or intellectual property, make sure these contributions are properly documented right out of the gate, says McDemus.
This includes the development of any new technologies created by the joint venture itself. It's also another reason why you should hire an experienced lawyer who could foresee potential issues and advise you on the deal.At some point, your small business may want to do business with a larger company or forge a joint venture.
A well-written business proposal can win the hearts and minds of your target audience. A well-written business proposal can win the hearts and minds of your target audience. This Joint Venture Sample Proposal is included in both PDF format and editable Word format chapters that can also be customized using the included Wizard software.
To create your customized proposal using your own logo and colors get Proposal Pack for Any Business. This sample is included in every Proposal Pack.
Download and install after ordering. Dec 15, · The business plan proposes a joint venture between Versace and H& M. The joint venture will involve selling Versace Top-end lifestyle product in H & M store.
The product plan is to introduce the Versace line in H& M store in gradual steps and in selected location that minimize undue competition between the products made by the two companies. PREPARING A BUSINESS PLAN What is a Business Plan?
• Management expertise available and management input to proposal • Key risks and anticipated problems State the proposed structure of the entity e.g. Limited liability company, joint venture, or an agreement. Jun 21, · How to Write a Venture Capital Proposal. Three Parts: Drafting a Formal Business Plan Making an Investment Proposal Negotiating a Deal Community Q&A While banks are often hesitant to loan significant amounts of money to new companies, a venture capital firm typically is more willing to make a bet based on the future of your business and its long-term potential%(12).
Sep 11, · A joint venture business plan is a document that describes a business merger of two or more companies. The plan typically has several sections and outlines the purpose, companies, and responsibilities of each company for the purpose of the joint venture.