Few people here in Louisiana or anywhere else would disagree that 2020 has been one of the most challenging years in recent history. With everything going on, many small businesses have experienced setbacks from which they could have some trouble recovering.
The answer could be teaming up with another business in order to try to return to a path that could lead to success. Entering into a joint venture may sound like a good idea, but it would be wise to fully understand this type of endeavor before moving forward.
The highlights of a joint venture
You may want to obtain more detailed information as it pertains to your situation, but the basics of a joint venture include the following:
- You and the other party or parties join forces to share expertise, money and resources.
- The collaboration can last only for a short time until you get your business back on its feet, or it could last for the long term if the arrangement turns out to be one that could be mutually beneficial into the future.
- By pooling your resources, you will probably save on marketing, which can end up being a significant expense.
- You and your partner or partners can form an entity together under which to operate, or you can continue operating as separate entities.
As you can see, you could enjoy a number of benefits from this arrangement.
Solidifying agreements regarding your joint venture
Your company and the other(s) can enter into a joint venture on a handshake, but it wouldn’t be advisable. Instead, you may want to document your agreement and include the items listed below:
- Identify the parties and members of the joint venture along with how all parties will manage the joint venture.
- Specify each member’s ownership percentage and percentage of the losses and profits.
- Identify the resources, employees and independent contractors (if any) associated with the joint venture.
- Specify the state law that will apply and what bank account the collaboration will use.
- Stipulate how to create and maintain financial and administrative records throughout the term of the joint venture.
Of course, parties will need to include in the agreement any terms that apply to your particular arrangement. The more comprehensive it is, the better the chances are that your company’s rights and interests will remain protected. For this and other reasons, it would most likely be in your best interests to work with an experienced attorney to help increase the odds of accomplishing all your goals.