Joint Venture

Sam · Posted: Mon Apr 12, 2004 5:10 am Post subject: Joint Venture

Joint Venture is an agreement between two or more parties investing in property or business. This venture has become a popular method of expanding business including real estate investments.

Possible reasons for a Joint Venture

There are various reasons for which people enter into a joint venture in business and property investments.

You may have the capital and capacity to borrow but you don't have the required experience.
You have both the capital and capacity to borrow while your partner possesses the land/space to set up the business.
You are employed full time somewhere else and unable to provide sufficient time for personal involvement.
Joint ventures are a common way to create strategic alliances. Here all the parties agree to share capital, skills, risks and rewards.

Benefits of a Joint Venture

You can share your skills and experiences with others in the venture.
Capital and economic risk is also shared.
Sharing of growth and profit margins is easily possible without difficulty provided a proper agreement is set up.
A joint venture provides opportunities to expand your business and investments.

While getting into a joint venture, the following factors should be considered.

Sufficient information about the partner must be gathered.
Credentials of the partner should be verified.
An exit strategy and terms for dissolution of the joint venture should be developed.
Proper allocation of income, profit and loss should be set up.

While fixing up a joint venture you must check the other person's attitude, decision making skills etc. Usually, most persons enter into a joint venture when they lack the basic necessities for setting up their own business and investments.

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