There are probably as many reasons to enter into a joint venture as there are people who use this business model both successfully and unsuccessfully. Some people enter joint ventures to have someone who has certain knowledge on their team, or maybe times are tight and entering into a deal with someone else makes the finances possible, or any other of a myriad of reasons out there, but no matter what the practical reasons for entering into a joint venture may be, the number one reason should be that you respect them and they respect you.
When starting the joint venture, be sure to go over, agree to and sign the agreement paperwork. These agreements are legal documents that define what each person in the venture is contributing, what each person is responsible for, how disagreements are solved, and how to dissolve the union, in addition to other information about the venture. This agreement is similar to partnership papers, but instead of running a full business together, you are just operating this one venture together.
Starting a joint venture with family is tricky, because no matter what the paperwork says, if you hit a hard road everyone involved usually takes it personally. If you feel you can handle the emotional roller coaster that is working with family, great, but if you have an reservations, it is better not to enter into a joint venture with let’s say, your brother in law.
If you are considering entering into a joint venture with someone who is considerably wealthier than you, this maybe another situation to avoid; the rule of money is that money rules. If you find yourself in this situation be aware that no matter what your joint venture agreement says, the I have more money attitude may come up again and again.
Never, ever put down money; hand over property, or any other asset without a signed joint venture agreement. If you do, you are giving your rights away and probably the assets in question as well. We would all love to believe that everyone out there is honorable or that we have the ability to know who is honorable and who is not, but the days of working a deal with a handshake are long gone. Know your rights and be sure that the other parties do too, and keep your assets and sanity.