But ultimately, the buck stops with you. You’ll have an endless supply of technical knowledge and advice, but the bigger business decisions will be entirely yours. And that’s where having a business partner can really sweeten the deal.
Another significant advantage of a JV partnership is that it becomes a catalyst for action. Left to your own devices, you might dither, delay, and generally procrastinate. Depending on your proclivities, you might spend weeks designing your business cards yet never quite get round to the much scarier task of handing them out. And no one will call you out on it, get annoyed with you, or generally tell you off because you’re a sole agent. You’re the only one who will know exactly how naughty you’ve been. But throw a business partner into the mix, and suddenly there’s some accountability. If you don’t pull your weight, you’ll worry you’ll be viewed as the weakest link, and that’s not a good look. With your business partner looking on, you’ll be highly motivated to pull your finger out and take action. And, of course, the same applies to your partner, so guess what; the business moves forward more quickly as a result.
If joint ventures are a great idea in principle, how do they stack up in reality? The first thing to say is that JVs can go both ways. I’ve seen some partnerships achieve some amazing things, much more than the individuals would have achieved on their own. But on the flip side, problematic JVs remain the most common reason for failed business ventures in the development world. So, I thought that in this article, I’d share some thoughts on why that might be, and perhaps more usefully, what you need to think about when considering a joint venture to make sure that you have a fighting chance of creating a partnership forged with steel rather than blancmange. Let me break down the five most significant challenges that I see with joint ventures and give you some potential solutions to each:
- Stranger danger
The most common problem I encounter with JVs is when the protagonists don’t know each other very well. Many have only recently met, yet because they have a common goal that’s very exciting, it sounds like the best idea in the world to team up. Usually, at least one of them secretly worries that they might not cut it on their own, so joining forces would be a massive relief. Then, buoyed by the joys of collaboration, they embark on a development journey together. It’s only down the road that they find that they have different values, expectations, priorities, and, in some cases, different levels of trustworthiness, honesty, and integrity.
The solution: Team up with someone you know well, preferably over several years. Ideally, you want them to be in your social circle; that way, they’ll be less likely to leave a mess on their own doorstep. If your prospective partner doesn’t tick that box, make sure you at least do some solid due diligence on them. Look at their corporate history on Companies House, if they have one, and google them thoroughly. Do they have any other joint ventures or business relationships? Do they have any credit problems? Check their credit history to find out. Also, make sure you’ve visited them at home and met their significant other; you can get a telling insight into people and their circumstances when you’re in their house and talking to their nearest and dearest. Finally, trust your gut. Your subconscious is very adept at telling you whether someone is trustworthy or if there’s something that doesn’t quite feel right. Don’t let rose-tinted glasses mask what your gut is telling you.