Joint ventures are a great way to team up with another company or person who are looking to achieve similar goals. By using your existing resources, you can save time and money to achieve your dreams. Before you set up your joint venture, decide exactly what it is you want to accomplish with the project. Are you looking to access additional information and resources? Do you want to tap into new markets or extend your marketing reach? What is it that you hope to accomplish? By having a defined target, you are more likely to hit the “bulls-eye” and create a winning plan.
Joint Venture vs. Traditional Partnership: Benefits
The main difference between a joint venture and a traditional partnership is that a joint venture is normally a temporary or project based arrangement. Because of this dynamic there are significant tax advantages to be realized. First, each member retains ownership of his or her property. Secondly, you will only be taxed on the joint venture profits according to whatever business structure has been established. Additionally, you and your partner can choose to use as much or as little of their Capital Cost Allowance (CCA) claim as you would like.
Let’s use an example of an inventor looking to bring a new product to market. Normally, an inventor will not have the resources and distribution channels needed to mass-produce his product. Thinking creatively, the inventor decides to research manufacturing companies with the capabilities needed to produce his product. By entering into a joint venture with the manufacturing company, the inventor now has access to additional funds, production resources, and distribution channels that would have required months or even years to develop on his own. The manufacturing company in turn has acquired a new product to provide to its existing customer base, thereby creating an additional stream of revenue. Both parties have retained their autonomy in regards to how the profit share is utilized.
Joint Venture Your Company
Suppose you don’t have a new invention to bring to market. Say your company is service-oriented, providing consulting services to the small business sector. Your dilemma is reaching and gaining greater exposure to your target market. How can you accomplish this without spending an arm and a leg on advertising? How about a joint venture with a bank or credit union that is currently servicing your target market? The bank may be able to offer your company’s services as a resource to their customers as a way of helping the businesses they are financing to succeed. Naturally, the bank is interested in the success of the businesses they’re funding and understands that any successful business will have a great marketing strategy. You reach a broader target market and the bank assists the businesses in which it has a vested interest, and you both retain autonomy.
There are a myriad of joint venture opportunities available. You can have great success with this marketing strategy if you’re willing to think outside the box, outline specific goals for your joint venture and follow through on the execution.