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.
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