Joint Business Plan

Madhurjya K. Dutta

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 Joint business and partnering

What is joint business

two or more businesses pool their resources and expertise to
achieve a particular goal. The risks and rewards of the enterprise
are also shared.
Joint business also about business expansion, development of new
products or moving into new markets, particularly overseas.

What joint business could give you:

more resources
greater capacity
increased technical expertise
access to established markets and distribution channels

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 Types of joint business

Depends on what you are trying to achieve.

co-operate with another business in a
limited and specific way
separate joint venture business, possibly a new
company, to handle a particular contract.

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 Joint business - benefits and risks

Businesses of any size can use joint business to

strengthen long-term relationships or to collaborate on
short-term projects.

A successful joint business can offer:

access to new markets and distribution networks
increased capacity
sharing of risks and costs with a partner
access to greater resources, including specialised staff,
technology and finance
A joint business can also be very flexible.

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 Problems are likely to arise if:

the objectives of the business are not totally clear and

communicated to everyone involved
the partners have different objectives for the joint venture
there is an imbalance in levels of expertise, investment
or assets brought into the venture by the different
partners
different cultures and management styles result in poor
integration and co-operation
the partners don't provide sufficient leadership and
support in the early stages

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 Plan your joint venture relationship

Before starting a joint venture, the parties involved need to

understand what they each want from the relationship

Any deal should:

recognize what you each contribute
ensure that you both understand what the agreement is expected to
achieve
set realistic expectations and allow success to be measured

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 Choosing the right joint venture partner

Assess a new potential partner, you need to carry out some

basic checks:
Are they financially secure?
Do they have any credit problems?
Do they already have joint business partnerships with
other businesses?
What kind of management team do they have in place?
How are they performing in terms of production,
marketing and workforce?
What do their customers and suppliers say about their
trustworthiness and reputation?

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 Create a joint venture agreement
Set out the terms and conditions in a written agreement. This will
help prevent any misunderstandings once the joint venture is up and
running.
A written agreement should cover:
the structure of the joint business, eg whether it will be a separate
business in its own right
the objectives of the joint venture
the financial contributions you will each make
whether you will transfer any assets or employees to the joint
venture
ownership of intellectual property created by the joint venture
management and control, eg respective responsibilities and
processes to be followed
how liabilities, profits and losses are shared
how any disputes between the partners will be resolved
an exit strategy mk_dutta Sept 2010 8
 Make your joint business relationship work

Communication
Sharing information openly, particularly on
financial matters
Establishing clear performance indicators
Flexible relationship.

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Sample Format

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 Outline for a Joint Business Plan
1. Executive Summary
Include a summary of the discussions to capture the investors
attention, the summary should be no longer than 1-2 pages.

2. General overview
Outline the nature of the business, the location, the finance
requirements, the time frame required to establish the venture, and
the duration of the venture if it has a limited life (e.g. a supply
contract)

3. Core business
Outline the core business of the joint business partner(s) and explain
how the proposed enterprise is compatible with their current
operations. If the business is in a new industry, the plan must outline
the reasons for the diversification
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 3. Business overview
It should contain details about you and your joint
business partner and include a biography of experiences
and expertise.

In what industry does the business intend to operate?

Who are the competitors?
Have any other businesses recently entered or exited
the industry?
How will the business be profitable, and what are the
growth opportunities?

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4. Product or Service Line

Describe specifically what your joint business will do.

What product or service will be provided?
Are there any unique features or benefits of your product
or service?
Describe the benefits. That is, what will the product do
for the customer?

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5.Management
Who will manage the overall operations of the Joint Business?
What will be the specific duties?
What other employees will be required and for what purpose?

6. The Market
To be specific about your marketing strategies and goals, as well as
how you and your Joint business partner will work together to tap
into potential customers.

What types of people will buy your product or service?

List examples of current clients you sell to (or if you are just starting
up people you have spoken to who have expressed interest in
buying from you)
What territory will you cover, or sell to?
How will you inform customers about your service or product? How
will you promote your business?
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Who are your competitors?Who are your suppliers?
7. Operational Plan
How and where are your products or services produced?

Explain your methods of:

Production techniques and costs
Quality control
Customer service
Inventory control
Product development

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 8. Marketing Objectives
Describe your product introduction, improvement, or
innovation
Describe your distribution plans.
Describe your pricing objectives.
Describe your advertising and promotion efforts.
Specific about your marketing strategies and goals, as
well as how you and your joint business partner will work
together to tap into potential customers.

Any additional information

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 9. Financing and Revenue
How much money do you have, and what is the actual
amount of money you need to start your joint business
(start-up budget)?
How much money is needed to keep the business open
(operating budget)? Prepare a
realistic budget.
Funds needed short-term
How the joint business will use the funds, and what this
will accomplish for growth.
Estimated return on investment

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10. Exit Strategy
How do you plan to get yourself (and your money) out of the
business?
How will investors get their money back?

11. Risks and Assumptions

What will you do if your market develops either more slowly or more
quickly than anticipated?
How will you react to competitor challenges such as under pricing or
new products that make yours obsolete?
How will you react to favorable or unfavorable changes in the
industry?
How will you react if there is a labor shortage or other labor-related
issue?
How will you react if there is an erratic supply of products or raw
materials?
Any additional information
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