As a business owner, you will have opportunities to create beneficial partnerships projects that can bring more profit and exposure. This is where a joint venture agreement comes in – a written contractual obligation between two or more parties that will protect their rights during the project. Since this type of business endeavour is not something to be taken lightly, here are 5 things you should have in mind before entering into a joint venture agreement.
1. Establish clear communication
All parties involved need to have honest and clear communication so no problems and issues arise during the project. Before signing an agreement, you need to build trust with your partners and ensure that all details are covered, like finances, HR, and everyone’s role. During the project, you should all meet regularly, preferably in person, but considering coronavirus pandemic, online will work as well.
If necessary, you may have to create an internal newsletter that will inform your and your partner’s employees on keynotes. Also, the moment you face a problem or any other issue that may jeopardize the project, you should notify everyone involved.
2. Measure performance and set targets
For everyone to be on the same page and work towards the same goals, you have to determine performance indicators. This will help you set appropriate metrics that will help your joint venture stay on the right path.
For this to happen, everyone with active participation in the project needs to know their role and what is expected of them. By evaluating performances, you are not trying to put employees and partners to shame, but correct potential problems in time.
3. Create a flexible relationship
When more than one party is involved in the project, it may be difficult to find simple solutions at times. For this reason, you need to create a flexible relationship with other partners in this joint venture agreement.
Take time to evaluate what works and what can be improved regularly, as well as what changes will make the relationship better. You can also sit down with your employees and ask them for feedback, and your partners can do the same.
4. Work with a legal team
Having a legal team prepare a joint venture agreement is crucial to building a fair and professional relationship throughout this partnership. For example, hiring construction lawyers to make sure all parties are properly addressed is one of the most important steps in this billion-dollar industry.
Moreover, in case of any problems between the partners, the legal team can resolve the issues through mediation and annexes to a joint venture agreement. A carefully drafted agreement will give all parties clear insight into their rights and obligation based on the laws and regulations that apply here.
5. Don’t rush into a joint venture
A joint venture is not something to rush. Before you decide to involve others in your project and sign a joint venture agreement, take as much time as you need for research. Start by evaluating whether the joint venture is what your business needs and how it can impact your company.
Additionally, you have to assess potential partners for strengths and weaknesses to see if you can work together at all. A lot can be at stake during a joint venture, from your resources to your reputation. Careful planning and thorough research can help you reach your goal with the right partner, or save you from the potential loss.
The bottom line
A joint venture agreement can be a blessing for business in the vicious market, allowing you to increase your potential for success. Of course, a joint venture is like any other business project — it requires preparations, analysis, research, and resources from all parties involved. With legal help and thorough evaluation, you can find the right partners to share this journey with you.