Simply stated, a joint venture is the development of a business opportunity through the special collaboration of two or more business entities acting together, while remaining independent. Joint ventures have become increasingly popular in recent years, especially in the real estate, e-commerce, internet and technology industry. Generally, these formal business entity partnerships allow venturers to combine, and take mutual advantage of, complementary experience, expertise, financial resources, and services.
Joint ventures may be conducted through a variety of business structures, such as, corporations, limited liability companies, and general and limited partnerships. Designing an appropriate business structure for a particular joint venture will depend on a variety of factors, including:
» Tax and Accounting goals,
» Business objectives, and
» Financial needs
A joint venture can be a valuable and flexible method of pursuing a business opportunity. For example, the establishment of internet websites and e-commerce businesses built on robust featured platforms for ultimate search engine optimization can be expensive. In many cases, these websites and businesses are created by serial entrepreneurs or start-up businesses that lack the resources to properly capitalize and finance the business. As such, these entrepreneurs and start-up companies look to share the cost of the operation with other entrepreneurs and businesses in the form of the myriad of business entities listed above. To be effective, however, the joint venture must be designed in a way that enable it to handle the potential management and operational issues that it is likely to encounter.