Make Sure You Get Your Joint Venture in Writing
Now that you've decided to move forward with creating a joint venture, there are a couple of things you should know. First, congratulations on your new endeavor! If you carefully consider all your options and watch out for common pitfalls, you will likely be pleased with your JV.
The most important thing about creating a lucrative joint venture is to carefully prepare and think out every part of the partnership. This means you must put every detail -- and that means every detail -- down in writing! There are three written documents that everyone creating a joint venture must have in order to get started, follow the road to success, and eventually break the agreement if necessary.
The three vital written documents you must create when entering into a joint venture are: 1) a JV agreement; 2) a business plan; and 3) an exit strategy.
The first document, the agreement, is really a contract. You and your partner will create a legal document that outlines and defines the entity you are forming. It will list the goals of the venture, each side's responsibilities, how long the JV is expected to last or the circumstances that would lead to its demise. It also will cover how revenues and profits will be split, and everyone will want to know that up front.
Because of its legal nature, some legal counsel is advisable for both parties. You and your partner may be able to draft the agreement together. However, it's a good idea for both partners to have independent legal counsel review the document before it's signed. This will help protect the interests of both partners.
If you do decide to go it alone and create your own original contract, it's a good idea to consult the Web for templates and tips and hints. The vast amount of information you will need to cover, plus all the foresight you must have into any eventuality makes it easy to miss some things.
Then there's the business plan. This document absolutely requires the presence and input of all parties in the agreement. Writing the document can also be fun, because it outlines all your future plans, such as goals, revenue benchmarks and what each party is bringing to the JV. The business plan will also outline how you intend to fund the venture, and how you plan to acquire loans or other outside money if necessary.
Even if you are flush with cash and don't need external funding, it is absolutely vital that you write a business plan. You and your partner will refer back to this document time and again when you are reviewing your progress and planning your future. You can also look to the business plan to watch the progress of your day-to-day operations, such as management, human resources and communication strategies.
Many new businesses and JVs choose to hire a professional writer to help them put their ideas into a cohesive order. Business plans are long and complicated, but they must also be organized so that you can follow them later. Professional writers can be found online, and some specialize purely in writing business plans.
Finally, you need a written exit strategy. Although it might seem a bit pessimistic to consider how the JV will end before it's even begun, the truth of the matter is that the average lifespan of a JV is about seven years. JVs end for any number of reasons. You may plan to end it after a certain length of time, or it may fail due to changes in the market. You need to be prepared for any situation.
A proper plan for an exit strategy will protect both partners' assets and trademarks. If you brought a trademarked item into the partnership, you want to make sure to leave with that trademark intact. Even better, if you decide to sell the JV for a profit, you want to make sure the profit-sharing details are square from the start.
Your exit strategy must specifically state who gets what when the JV ends. It also needs to include a list of events that might signal the end of the JV, like reaching specific goals, certain changes in the market, or selling the company. Again, this is a document with a lot of legal ramifications, so it's best to have your lawyer review it.
When you go about it the right way and put all these aspects of your JV in writing, it will ensure that you walk out of the agreement with everything you had when you walked in. Creating these documents also reveals a sense of your professionalism and commitment to success. Most important, they will keep you and your business partner from fighting a nasty legal battle if and when the partnership is over.
About the Author: Justin Bryce has been a contributing author for this website
and is an acknowledged expert in the field of Joint Ventures.
He can be found on the Internet at this website:
http://www.lazy-internet-marketing.com
More articles by jbryce
Print Article | Download PDF | 79 views | Jun 23 2007
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