|
|
How forming strategic alliances with other businesses can get your own business off the ground
If
you’re thinking about starting a business you’re going to need to think
about the bottom line and making a profit as quickly as possible.
Working with other businesses can help you quickly build your own
business.
Aligning yourself with other business
owners or companies can help you :
- shorten your learning curve;
- boost your new company’s credibility;
- expand your sales or
distribution channels; and
- make it more difficult for competitors.
If you are a small business owner you can “team up” with one or more
other small business owners, or you can “team up” with big companies!
You might want to work with another business that does what your
business does, or a business that provides products or services that
are complimentary to your business. The opportunities are endless.
Generally,
a joint venture is when a new business entity is funded and formed by
two or more existing businesses. Each of the founding businesses owns
equity in the joint venture, as well as share in the revenues, expenses,
and control of the enterprise. Most small businesses don’t actually
form joint ventures though – instead they establish what is commonly
referred to as a strategic alliance.
A strategic alliance is essentially an arrangement in which two or more
businesses remain independent entities but work together in some manner
with the goal that each will make money. And these days – who isn’t
looking to make money?
For example, a woman was
recently laid off from her job as a graphic designer. She decided to
start her own business and “set up shop” from her house. While she
certainly had the talent to make a go of it, she didn’t have any client
prospects. So she connected with a web designer who had started his own
business a year ago. They joined forces to quote a job that neither of
them could have bid on alone, and they got the work. Each of them still
maintains their own small businesses, and they did not form a third
entity, but they share a big client and are both making money. It’s a
win-win all around for their client and both of them! But they were
careful – and did it right. They spent the time to determine if they
were a good “match,” they came up with a solid plan, and they each made
sure to protect themselves legally. They also were careful to have a
clear contractual agreement with their mutual client.
If you are considering forming a joint venture or strategically
aligning yourself with another profession or business, find out whether
or not you may have any restrictions. If you are a licensed
professional your state licensing or ethical board may regulate or
“strongly suggest” what you can or can’t do and who you can affiliate
with. Also, carefully check your business or professional liability
insurance policy to determine your coverage with regards to entering
into a joint venture or strategic alliance. This can be tricky as it
isn’t always spelled out. If you can’t easily identify the answer, ask
your agent to tell you and then ask him/her to point out the relevant
wording. You should also consult with your tax advisor to see what, if
any, tax consequences you need to consider.
Finally, make
sure your own business’ legal entity is established before you decide
to collaborate with another business. It is often advisable to act
within your business capacity as an officer or manager of your own
company so as to minimize personal liability. Check with your legal
advisor.
When you decide to collaborate with
another person or business to form a strategic alliance, you should
have a signed written document that spells out all the terms of your
agreement. This is definitely the case when forming a joint venture.
You and the business(es) you are joint venturing with should spell out
“your deal” including what you are looking to accomplish, each of your
duties, obligations and liabilities, compensation, how long the
agreement will be in place, how the arrangement can be terminated, what
constitutes confidential information, how the agreement can be
modified, what happens if someone breaches the agreement, and what
state’s laws govern the agreement.
Forming a strategic
alliance can mean reaping the rewards of a team effort without loosing
your business’ autonomy or sharing equity. Done correctly – it’s a
great way to get a new business off the ground and put profit in your
pocket.
Copyright
2009 - Law
Office of Gina M. Ghioldi, P.C.
In accordance with rules established by the
Supreme Judicial Court of Massachusetts, this web site must be labeled
"advertising." It is designed to provide general information for
clients and friends of the firm and should not be construed as legal
advice, or legal opinion on any specific facts or circumstances.The
attorneys affiliated with the Law Office of Gina M. Ghioldi, P.C. are
licensed to practice in Massachusetts. The availability of this site to
residents of any other state or country is not intended as a
solicitation of clients in those states or countries. Neither the
receipt nor the distribution of materials, including the use of private
electronic mail, constitutes the formation of an attorney-client
relationship. An attorney-client relationship with The Law Office of
Gina M. Ghioldi, P.C. or any of the attorneys affiliated with the firm
will be formed only upon the execution and delivery of a retainer or
contingency fee agreement and the satisfaction of the conditions
contained therein. Materials distributed shall not, in any event, be
deemed confidential or privileged. We cannot guarantee that all
inquiries will get a response, and we cannot guarantee the accuracy of
posted information, especially as to each individual situation. All
responses in by e-mail are only for the education of the recipient as
to the types of issues specifically relevant to their inquiry, and are
not legal advice and should not be relied upon by the recipient.
|
