Joint venture is an effective way to expand your corporate holdings or marketable assets. It can help expand your distributed business empire, allow you to gain additional revenue streams, and provide you with valuable experience in business.
A joint venture, or joint ownership entity, is a common way to expand your company. In a joint venture, two or more companies combine their resources to produce a product or service.
It may be useful for buying and/or developing an apartment complex, hotel, or other high-level asset. For example, if buying an apartment complex was hard and expensive, how does one create their own joint venture that buys the land and construction rights? By combining with another company that has these rights, it becomes easier to acquire the property you want.
Joint ventures are an effective way to expand your company size and reach. By joining up with another company with similar goals, you can grow together.
Determine what percentage of the property each party will own
When creating a joint venture, you need to determine what percentage of the property each party will own. Typically, one to five percent of the property is owned by the company, and the other party owns ninety percent of the property.
The five to ten percent that you agree to share in ownership is called equity in the partnership. When creating a joint venture, you must decide whether it is best for both parties to have full control or if they should share control.
If one person wants to control themselves while the other does not, then the person with less control should use their control to obtain resources and equipment for their business. If one person does not want help than the other does!
By sharing resources and equipment in a joint venture, there are many opportunities for growth. The more partners your business has, the more opportunities they have to grow and take advantage of those resources.
Establish a joint venture agreement
As a leader, you can create a great deal of value for your organization by entering a joint venture. A joint venture is an alliance between two or more entities to achieve a common goal or compete with another.
For example, North Carolina State University and NCR Corporation signed a contract to manufacture and sell NCR products in Canada. Or North Carolina State University and The Home Depot signed a contract to develop an upscale apartment complex called The Village at Naughton Commons.
In the case of the apartment complex, The Village at Naughton Commons needs land and housing facilities, so The National Title Company entered into a joint venture agreement with them. Under the joint venture agreement, The National Title Company will provide housing units and land for the complex.
Similarly, Doyles Real Estate Group provided space for The Village at Naughton Commons in their development project. This helps add more value to the property as well as introducing another strong business partner into the community.
Consider tax implications
When a joint venture corporation has tax liability on its member corporations, it can be difficult to ignore the tax implications. For example, if a hotel member corporation acquires an apartment complex as a venture, the acquisition should be treated as a sale and not an investment.
Similarly, if a motel member corporation owns an apartment complex as a venture, then the acquisition should be treated as a loan and not an investment. Although these types of investments are commonly referred to as ventures, there is no legal definition for this type of business ownership.
If you have questions about the alliances you have with your members, consider asking your business consultants whether or not treaties can be used for structuring joint ventures for commercial properties, hotels, and apartments.
Make sure the joint venture agreement addresses all potential issues
A potential issue that may arise is whether or not a joint venture agreement should address freedom of choice. In order for a person to have choice in business, the agreement must allow for freedom of choice in matters such as input into strategic and financial plans, promotion of products and services, and the right to exit if necessary.
For example, if a company expands its product line slightly, the agreement should account for this as an opportunity to expand the size of the joint venture. If someone wanted to leave at this point, they could do so without affecting the company’s finances or its customers.
It is important for a joint venture agreement to cover these issues and more in order for people on both sides to understand their rights and responsibilities. The ability to fully understand each side’s role before agreeing on a joint venture agreement can help ensure that both parties are happy with the contract.
Include details about the property
This can include extra space, size of room needed, or what type of property you are looking at. It can also include information about the neighbors, buildings, or properties within the community.
Joint ventures are a great way to add value to your property. When a joint venture is involved, the owner of the property gets more than just a good deal on supplies and services. They receive an opportunity to be part of a larger business and/or receive higher service standards for their products and services.
If you are interested in joining a larger business, check out some internet search engines for joint ventures and find some shared interests. If you are interested in providing services to the community, look into local organizations for assistance.
Name the joint venture
Creating a joint venture is an effective way to streamline business operations in business, industry, and government. A joint venture can provide a dedicated channel for financing and operating a business, providing benefits such as reducing competition and increasing efficiency.
In the world of business-associations, companies, and government, joint ventures are common. It can be difficult to create a joint venture that meets your needs, though. For example, might you partner with a company that provides services you need but does not have ownership or management capacity readily available?
It is important to consider who will be involved in your Joint Venture before creating it. If there will be people on both sides of the fence, then create an ‘intermediary’ joint venture to help with getting approvals and working together.
If there will be people outside the company that you want to control then create an ‘owner’ or ‘control’ joint venture to get control of the company.
Divide responsibilities among members
Grouping responsibilities among members of a joint venture increases the likelihood that one or more members will do a good job of all the tasks required by the venture.
Some responsibilities can be divided between members of the joint venture. For example, assume that a joint venture is formed to operate an apartment complex. The owner of the apartment house may handle building maintenance, while the landlord manages housing units and pays for utilities.
By assigning different members of the joint venture different responsibilities, each member can focus more on what is most important to them. This helps to create stronger team feelings, which increase your confidence in each endeavor.
When all members are responsible for their parts of the project, it is possible for one member to feel like they are being taken advantage of. By having each member be assigned a responsibility, this type of behavior can be addressed.