The Team Building Directory

Advice and information about all things team buiding

Bookmark and Share
5 Risks in Joint Ventures to be Aware of
5 Risks in Joint Ventures to be Aware of image

A joint venture could represent the best decision you have ever made for your business, but it could also come undone as a result of poor planning, prioritising, or unstable relationships between partners.

Here are some of the risks to look out for and avoid at all costs.

1.     Interruptions

The mark of any strong business during times of significant change or upheaval is the ability for certain things to remain strong, stable, and consistent. It’s the classic metaphor of a ship on stormy waters.

Joint ventures can, however, disrupt leadership continuity if the importance of maintaining continuity is overlooked, or disregarded in the chaos of sudden change. But leadership – more specifically, stable, and clear leadership – remains just as important to a business and its employees in particular as it always has been. It must be considered a priority.

2.     Ambiguity

A lack of clarity is so often the downfall, even if you’re not expressly aware that you, your collaborative partners, or your employees are feeling confused, lost, or unclear on what’s going on, and what needs to happen.

Joint ventures are vulnerable in exactly the same way, and any ambiguity between you and your partners toward the roles you are required to fill can act like a slow leak to a once promising venture.

It sounds basic from the outside but, when you’re going through a joint venture yourself, the importance of ensuring clarity between all involved is easily overlooked. This is why choosing to involve corporate solicitors who have seen countless businesses through ventures just like this one can transform an otherwise difficult and confused process.

3.     Clashes

It is impossible to know for certain whether or not you will be able to work harmoniously and productively with someone until you are in that position. Even if you’re a good judge of character, the chance is there that you will clash or knock heads with your partners at some stage in the process. A high financial and emotional investment means that tensions can run high, even if the venture is moving along well.

These clashes don’t need to be significant, but they can be – and that is the risk that any business owner should keep in mind when they enter into a professional relationship like this one. Keeping your cool in tricky meetings is hard, but necessary if you want to keep the relationship strong. 

4.     Imbalance

This is a common cause of the clashes mentioned above. If one partner or director thinks that they are investing more capital, more resources, or more time into the joint venture than others, then the opportunity for conflict and disagreement will almost inevitably present itself.

The same goes for imbalances in benefits. If one party ends up gaining significantly more than the other from the venture, then things can easily start to unravel for both sides.

5.     Distrust

To enter into a joint venture, you need to invest a significant level of trust into the other parties involved. Business owners, shareholders and partners are used to playing their cards close to their chest, and to practising a relatively strict approach toward keeping information confidential.

Sometimes, once-confidential information will need to be shared with partners in order for the joint venture to move forward. When the time comes, it is not unheard of for partners to start digging their heels in the sand.

For obvious reasons, this can have a very detrimental impact on your relationships. A lack of trust comes from a place of self-preservation but, when you enter into a joint venture, you need to be able to see the bigger picture and, most importantly, serve it.