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Joint venturing is a big thing in business today, but newbies in the business environment often fail to understand the idea behind it. A joint venture is basically an agreement between two or more businesses to team up, and in doing so obtain greater market influence and a more powerful place in the business environment. There is a sharing of assets and profits, but no transfer of ownership and it can be for a limited period of time. There are both risks and advantages, and we shall look at both sides.

Joint Ventures – the Pros:
•    If you are just starting your business, then joint venturing with a more seasoned, experienced partner will give you the “jumpstart” that you need. It can make it much easier to step into a new, unfamiliar domain, and your learning is much quicker with a partner compared to the trial and error learning process of working on your own.
•    Second, joint ventures with an established business can build credibility for your own. Your being associated with a familiar name would damp your customer’s concerns about your reliability, which in turn would give your business a big boost and enable it to hold its own in the market.
•    Also, a great way to beat your competitors is to join them. It is a win-win situation for all parties, since none of the businesses need to worry about the competition from one another. All the businesses in the agreement can maintain high profit margins and also keep other businesses from reaching your target market.

Joint Ventures – the Cons:
•    Joint ventures, like any other business aspect, bring their risks, and possibly the greatest of these is the risk of working with the wrong people. If you get stuck with a selfish, unprofessional, or in the worst case, fraudulent partner, you risk hurting your business’s reputation, and shattering your customers’ trust. Thus care must be taken in choosing the partner to joint venture with.
•    Secondly, joint ventures often fail owing to a clash in objectives of the partners. If one business aims for capturing a large market share despite the expense of marketing, and another aims simply for stability or stronger cash flow without any significant increase in sales, it is impossible to agree on a strategy. One of the partners will inevitably end up at a disadvantage.
In conclusion, therefore, joint ventures can be regarded as a highly useful strategy, especially for a beginner, but only after careful selection of partners, and a clear agreement among all partners on the objectives of the joint venture.