By: Barry E. Haimo, Esq.
July 5, 2021
What Are the Different Types of Joint Venture?
If you are still trying to determine what type of partnership you want to form, look at the goals you are trying to achieve. This is where creating a joint venture may become your best option.
There are different types of joint venture out there, each of which can help your business and your partners to achieve specific goals and complete different projects in the long run.
There are two different types of joint venture:
- The joint venture can be a merging of two different businesses or parties for a limited amount of time. This merge is usually set up when both parties want the connection between the two businesses to be public and well known among the business’s customers or other business partners.
- The joint venture can be created as a separate entity. Two businesses or partners contribute their resources, assets, connections, and so on, into the joint venture, but the JV is not directly named after or associated with the partners involved. This is a good format for JVs that involve multiple partners or businesses.
Why Are Joint Ventures Created?
There are many advantages to forming a joint venture. Joint ventures can be created for the following purposes:
Networking and Expanding Customer Bases – Joint ventures are ideal for businesses looking to expand their reach to a different customer base or market than the one that they are currently serving.
Say, for example, that your target market contains mostly men, but you would like to gain more women customers. Find a brand or business that appeals to women and already has a strong female following. By putting your name next to theirs, you can reach out to that customer base through a brand that they are already loyal to or respect.
Partnerships are not just useful for reaching out to customers or clients. If you would like to make stronger connections between internal resources, a joint venture can help you network and learn more from experts who know how to satisfy your business’s needs or solve your business’s problems.
Research and Development – You know the saying “two heads are better than one”? The same applies to two business partners trying to work on the same research project.
Different partners may have different resources to offer to complete the project (i.e. funding, staff, client base for focus groups). Pooling these teams and resources together can give each partner a different perspective and save the trouble or cost of finding all of the resources they need.
When the research is completed, each partner can look at the results and share the benefits of this new knowledge. The research can be applied in different ways to each business, and the businesses can then part ways.
Higher Purchasing Power – Buying items in bulk lowers the cost of each individual item. So why not make one giant order with a partner who needs the same items? The ease of creating joint ventures allows businesses to use this type of partnership for simple tasks that benefit all of the partners involved.
Where Do I Begin?
Creating a joint venture can help you and your business partners with any of the above goals. Together, you can achieve more.
For more information about the power of joint ventures and how you can form one in Florida, contact an experienced business planning attorney.
Originally published 02/23/2017. Updated 07/05/2021.
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