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