There are two main reasons why businesses enter into joint ventures. Ultimately, it allows your business to achieve goals that would otherwise be impossible.
Access to a bigger pool of resources and expertise
A joint venture pools your joint venture partners’ and your resources and expertise together. This effectively removes factors that may have been hindering you from achieving the objective had you operated solely.
Lower costs and risks
Through a joint venture, businesses can move into new markets quickly by drawing on each other’s expertise. This eliminates the costs associated with developing your own processes or products from scratch. Overall, this leads to reduced expenditure of entering a new market.
Furthermore, the risks of the project are shared amongst the participants of the joint venture. This means that if the venture fails, all parties will share the costs. However, note that there’s no requirement for the stakes to be equally distributed amongst the partners.