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Avoid Legal Hassles By Putting Your Joint Venture In Writing

Article Summary: You've decided to enter into a joint venture (JV). That's great! If you think it through carefully and take the time to treat it like a brand new business, your JV could help your business grow exponentially.

Now that you've decided to move forward with creating a joint venture, there are a couple of things you should know. First, congratulations on your new endeavor! If you carefully consider all your options and watch out for common pitfalls, you will likely be pleased with your JV.

The key to creating a truly successful JV is to take the time to thoroughly plan every aspect of the partnership. And, you need to get everything -- and I do mean everything -- in writing. Those written documents are essential to getting started on the right path to success, staying on the path, and safely stepping off it if necessary.

These are the three essential documents every joint venture must create: 1) a joint venture agreement; 2) a business plan; and, 3) an exit strategy.

The first document, the agreement, is really a contract. You and your partner will create a legal document that outlines and defines the entity you are forming. It will list the goals of the venture, each side's responsibilities, how long the JV is expected to last or the circumstances that would lead to its demise. It also will cover how revenues and profits will be split, and everyone will want to know that up front.

Because this is supposed to be a binding legal document, each party will want to have his or her lawyer review the final copy before anyone signs. You might even want to enlist legal help in writing the documents. Ensuring it is legally viable will protect everyone's interests.

If you decided to draft the agreement with your partner, look for a good template or checklist to help you. There's so much to cover that some important items could easily be missed. Templates and checklists may be available through your lawyer or local business organizations, or you can search for them on the Internet.

Both parties absolutely must be involved in creating the business plan. This will be the map that shows how to reach your goals, what you and your partner are bringing into the agreement, how and where the JV will be set up, etc. The business plan will also outline how you will get loans and other funding if necessary.

Even if you don't plan to look for funding, it's very important to develop a sound business plan. This is the document you and your partner will refer to when you're planning future moves and reviewing your business to see if you're on your way to reaching your goals. It also specifically states how many of the practical aspects of your business will be accomplished, such as your human resources strategy, marketing strategy, and communication.

Business plans can be fairly complicated and lengthy. If you've never written a business plan before, you may wish to hire a professional writer. Professionally written business plans have a greater chance of receiving funding.

Finally, you need a written exit strategy. Although it might seem a bit pessimistic to consider how the JV will end before it's even begun, the truth of the matter is that the average lifespan of a JV is about seven years. JVs end for any number of reasons. You may plan to end it after a certain length of time, or it may fail due to changes in the market. You need to be prepared for any situation.

A good exit strategy protects your investment in the JV. For example, if you bring a trademarked item into the partnership, you'll want to make sure you walk away from the JV still holding full rights to that item. Or, if the business that results from the JV is to be sold, you'll want to ensure you get your proper share of the profits.

Basically, the exit strategy simply assures that each party gets what he or she is owed when the partnership ends. It will list a specific set of circumstances as well, which, if they were to occur, would result in the end of the JV. Due to the legal nature of the document, and the possibility of someone getting upset over a misunderstanding, it is advisable to have legal council take a look before you sign.

When you put your joint venture in writing, you prepare for your success and insure against losses in the event of failure. Having these written documents on hand from the start shows your commitment to the business, gives you a clear path to follow, and helps you and your partner remain on track. And, when the JV ends, you'll know exactly what each partner walks away with -- without a complicated, nasty legal hassle.

Article Source: http://www.upublish.info

About the Author:
Justin Bryce
Justin Bryce has been a contributing author for this website and is an acknowledged expert in the field of Joint Ventures. He can be found on the Internet at this website: http://www.lazy-internet-marketing.com