Critical in every joint venture is the terms and agreements in profit and resource sharing and delivery of products and services that are within the standards of the company.
Terms and conditions of joint venture agreements in resource sharing are foremost important. Thereby, company should have an inventory and consolidation of resources to determine what to share with its partners. What key business processes should be retained? How much fund should be shared? Who are the key people to involve in the joint venture? What trade secrets are to be shared? When all these are studied, the company should comprehensively study the cost-benefit schemes of all resource-sharing options. The study should also be anchored on the delivery of quality product and services.
Particularly, would one resource-sharing option provide the company the target profit? Would the company and its partners deliver the quality product and service under such resource-sharing option? If not, what resource-sharing option should be appropriate? If appropriate resource sharing were in place, what would be the mechanism to ensure delivery of quality product and service? What then would be the acceptable profit-sharing scheme? If the company will share 70% of its resources, would it instantly have a 70% share of profit in the joint venture? The company should also look into the gross revenue of the joint venture. They should trace the magnitude of contribution of each company to the gross revenue to answer whether a 70% resource-share equates to 70% profit share when the company market share is only 30%.
Withdraw or suspend a joint venture if the thorough reviews on sharing options find a skewed profit and poor delivery of product and service. If findings are otherwise found, then engage and draft the terms and conditions of a joint venture. Inclusive in the terms is the mechanism to ensure achievement of venture agreements and safety measures if it bound to fail.
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- Rivers Corbett
- Rivers Corbett, MBA is an award winning entrepreneur, speaker, and author of "13 Fears of Entrepreneurs" He has received numerous business honors including Entrepreneur of the Year, Canada's Hottest Start-ups List and Canada's Fastest Growing Companies list through Profit magazine and most recently recognized as one of Canada's 10 Mentor RockStars.. Rivers is presently a member of Startup Canada's National Advisory Council, founding entrepreneur of StartUP Fredericton & the "Entrepreneur in Residence" at the University of New Brunswick. His real joy and expertise is being a StartUP Advisor and "zagging while everyone else zigs"...like his two newest businesses ventures the Relish Gourmet Burgers restaurant chain and TheRockStar StartUP for StartUP entrepreneurs. Oh... he is also the leader of a team of over 25 chefs through his other company The Chef Group. Not bad for a guy who hates to cook. Always looking for a new idea to help businesses' succeed...this is his newest marketing discovery for StartUPs The Lyoness Advantage. "Rivers is a 21st century entrepreneur, he's the one to watch" - Jim Gilbert: Canada's Huggable Car Dealer!