An alliance created with an eye on strategy, your joint venture partners should complement your business activities. They should capable of providing a complementary service like distribution, finance, technology or personnel. For example, you could form a venture with a company with distribution capabilities if you need one and offer your finance capabilities in return.

So that everyone in the joint venture gains, and gets what they want from it. But conflicting views among the parties to the venture can spoil the party. So here are some things you should look at before you become party to one:

Do a background check

Before entering into any business relationship, it is important to know whom it is you are dealing with. This is especially in joint ventures, as your reputation becomes entwined with that of your partners in the venture. Verify information with third parties, and make sure that there is a strong basis for trust. Also, ensure that the company is capable of holding up its end of the deal.

Build a Business Plan

The business plan for your joint venture should be drawn up by all parties involved. The plan should include clearly defined goals for the venture as well as benchmarks for defining success. An exit strategy that is acceptable to all parties as well as terms for winding up the venture should also be incorporated. There should be a contingency plan in case for some reason the venture is dissolved before the specified date.

Appropriate Structure

You can register your joint venture in a variety of different ways. A Limited Liability Corporation is one option as are other types of new businesses. Many fast growing companies choose to register their joint ventures as strategic corporate partnerships. Investigate all your options before making a decision.

Availability of Property and Resources

Ensure that what each partner brings in terms of land and buildings, revalued or depreciated and other resources are clearly spelt out. Remember to establish whether any conditions attached, like limitations on use of property. Clearing all issues at this stage will help avoid monetary problems down the road. If you can't reach an understanding with your partner on the above issues, then perhaps you had better look elsewhere. However, if you see eye to eye with your partner on all issues, your joint venture is likely to flourish and pay handsome dividends.

Special Allocations

Decide how to apportion special gains or losses, and income and deductions to each member before you sign on the dotted line. And at the same time, establish how to recompense members who make particular services available

If you can't reach an understanding with your partner on the above issues, then perhaps you had better look elsewhere. However, if you see eye to eye with your partner on all issues, your joint venture is likely to flourish and pay handsome dividends.