As we are getting closer to the Federal Acquisition Regulation provisions concerning the WOSB Program being finalized, and finalizing the list of firms we plan to approach for our membership JV; I have decided to start this inaugural discussion thread of a multi-part series because of the many questions that I have gotten from Woman-owned firms.
These questions have allowed me to see that, outside of core competency, many WOSBs don’t have a clue about what a Joint Venture really is or how and when the structure might benefit there firm. And, plain and simply I don’t have the time or inclination to educate individually.
So, let me start by killing a few boogeymen before we get into meat-and-potatoes:
I. It is natural that you would want to discuss profit share – but, let’s focus our attention on the creation of profit… first; shall we? In my experience, Democracy does not work well with full alliances – there must be a dominant partner. Shared-equal management structures simply do not work.
II. The choice of collaborative relationship can be critical. Before I take a deep dive in the JV, it is important to note that it is not always necessary, or desirable, to form a joint venture company. Moreover, besides the more commonly known partial alliances, e.g., Subcontracting, Licensing, and Franchising: there are 10 more that should be taken into consideration, see below:
- Informal or semi-formal agreement
- Project-focused alliance
- Product-focused alliance
- Service-focused alliance
- Joint design-research-development
- Joint/parallel production
- Cross-invested operations
- Joint-branding – and my favorite…,
- Supply-chain linkages
Whichever you choose, there should be a clear strategic and operational rationale for doing so.
III. Before deciding whether or not a Joint Venture is the best approach to developing & exectuing your business strategy, you should determine if either of the following four vehicles are better suited to accomplishing your strategic directives:
- Organic Growth
- Divestment and/or re-investment
There are specific business conditions that will make each of these vehicles more attractive than the others. I will adress the approriate conditions for each in subsequent posts. I am taking the time to go through these as many times firms have come to me with a desire to form a JV, only to realize upon further review that one of these was better suited. It’s a win-win because it saves firms’ like mine billable time, and it saves firms’ like yours money and collateral opportunity costs.
Many more topically individualized discussion threads to come….
There will be no limit to the number of new discussion threads for this discussion series; as I feel it absolutely necessary that you be fully informed about the JV structure before deciding whether to be part of one or not; particularly the one I am currently setting up to compete in the SBA WOSB program. however, if you choose to simply be a fly on the wall, so be it. At any rate, it is my hope that you all benefit from my “thinking out loud”.