You might have come up with a revolutionary business concept, but do not possess the finance, market knowledge or resources necessary to turn your idea into a business reality. On many occasions, especially in the current economic context, collaborating with a business already established in your chosen area, will minimise the financial risk and strengthen the credibility of your proposition as you move into a new sector. However, though the combination of resources and different business experiences could provide a competitive edge in an increasingly hostile environment, the complexity of such relationships should not be under estimated.
Is it the Right Model for Your Business?
Collaborating with a third party is a classic way to expand your business. However, moving away from your core business requires careful planning if you are to deliver a commercially viable and mutually beneficial outcome. Before embarking on a joint venture you should take a look at our start-up checklist:
• Have you agreed how to manage your joint venture?
• How much capital does each partner plan to inject initially?
• What will be the decision making process?
• What is your conflict resolution strategy?
• How will you establish the success of your joint venture?
• What happens if the partnership dissolves?
• How will profits be apportioned?
• What is your growth strategy?
• How will future growth be funded?
Regardless of the type of collaboration you choose, there will always be an element of risk. Getting advice early on in the process could prevent issues further down the line, when resolving disputes could be more problematic.