Whether you're new in the art of business or have been an entrepeneur for some time, you'll eventually come across the idea of becoming part of a joint venture. It may sound like a bit of complicated business talk but a joint venture is a variation on the age-old idea of a business partnership. Though, of course, it's a lot more complicated than that.
Joint ventures are legal entities created when two or more companies pool their resources for a single goal.

As legal entities, they are similar to corporations, able to operate independently of its founding companies and has the corresponding rights as a business operation – this means it can acquire properties, has separate liabilities and assets and can sue and be sued in court. Joint ventures usually come about in the way that all partnerships usually come about – one party has something that the other wants and the other party is willing to share its resources to the benefit of both. Joint ventures are formed by small companies hoping to expand, while global companies usually does them so that they can enter a particular country's market.

There are several advantages to joining a joint venture. The primary one is that a joint venture is a shared business – liabilities and assets are divided evenly between two or more partners. This can enable the participants to have higher profit margin for a lower amount of risk. Usually, when a business enters a new market, the risks involved can be terrifying for a new company – even larger corporations tread lightly when they enter a market. Going into a joint venture with partners can make sure that the price of failure is not devastating for the company.

Another advantage is that partnering with someone who already has the infrastructure ready for your product enables you to deliver the product faster than other businesses. Trying to build up a distribution channel is a difficult proposition. It costs money and can be subject to delays – having ready-made distribution points provided by your partner can make it easier for a company to deliver the product and helps them focus on one part of the operation. Joint ventures also carry with them the weight of the partners' reputations – having a well-known and trusted brand backing you will often help you sell your product more.

There are, of course, disadvantages. The primary one is that all of this profitability depends on your partners' dependability. Having unscrupulous or less-than-stellar business partners can cost you a whole lot of money. Another one is that a joint venture often involves integration and this can be difficult for both parties – culture clash and integration problems will crop up, if you're not careful.

It sounds all complicated but the process of going into a joint venture is actually very easy. The formulation of a joint business plan is almost always the first step; it assures that all the participants are on the same page and assures them about the efficient division of work. After that, legal and binding agreements are signed to confirm the partnership and it goes forward from there.

Joint ventures are a great way to penetrate a market and I hope this brief introduction gives you the bare bones of what you need to get into one.


A joint venture refers to a partnership between two or more people for a business. It differs from the word “partnership” in the sense that it is more formal and in more legal terms. In a joint venture, the two parties sign a legal agreement that they will be sharing the tasks and the risks of the business or the new venture.

Most start-up businesspeople opt for a joint venture as opposed to single proprietorship or multi-partners or corporation. Here is a brief rundown of the reasons why a joint venture is a good choice.

Less risk
For people who are just starting their business or are virtually novices in the business arena, it can be frightening to just plunge head first and not have someone with you to cushion the risk. Having a partner or partners will make your investment smaller and therefore, lesser risk for you should the business fail. This is ideal for young entrepreneurs who are just testing the market and are not yet sure of their business ideas yet or those who are going into a field they do not know.

Having a go-to guy
When you have partners, there will be division of labor. Thus, you don’t need to do all the work yourself. You can divide the work among the partners where each one will handle one aspect of the business. This set-up is ideal for those who are doing the business part-time and would not be able to look into the business 24/7. If you can’t make it for instance to look at materials or check the quality control, at least, you have someone who can take over the reins for you. This does not mean however that you have the right to slack off.

Single proprietors hire people to this for them but sometimes, it is better to have someone who you can trust. Employees are also seen as not having the same kind of passion and commitment to the business as perhaps a partner because they do not have a personal stake on it. Thus, they cannot be relied on the same way as you can rely on a partner.

Having someone by your side
For some people, they do not really care about the investment or the risk, they just want someone to be there should the business fail or have problems. Having somebody to rely on in times of trouble is vastly reassuring. Besides, although you can hire people to be there for you, there is nothing better than having a friend or someone you trust by your side.

More ideas
Two heads are better than one or so the saying goes. Having many partners means that you will also have a lot of ideas to choose from. These can be good for the business especially when you are strategizing on marketing your products or thinking of a product idea or an additional service. The more people you have on your side, thinking for the business, the better.