26 Jul The Difference Between a Joint Venture and Investor Partner
An investor partner is somebody who will invest money into your challenge event, your launch, your business and then receive a return for their money. You should have a payment schedule created with your investor so they would know when they are going to get paid and when you are going to do the payout. This way, you would also be able to plan your expenses accordingly.
The other kind of relationship is the joint venture relationship. A joint venture is when two or more people come together and agree to share expenses, risk, profits, and the cost of doing business together. You usually agree on a predetermined revenue share by percentage or a number. When you’re sharing in a JV relationship, each partner may come into the table and will put any agreed amount into a deal, a Facebook ad spend, hiring a team, or whatever you may need for your launch or any other business activities. They also are involved in business decisions and strategies that leverage and put the business in a better position. When the business starts generating an income and that revenue starts coming back, JV partners will be involved in seeing to it that expenses are paid off and ensuring that the investments that were initially pulled from each partner(s) are returned through appropriate revenue shares, if not, reinvested back to the business.
In a JV relationship, partner(s) will have to agree amongst themselves the terms they want for the revenue share. Strategize it as you deem appropriate. The important thing here is that you put in black and white whatever you decide and might come up with. Spell out when you are going to take profit shares, when you are going to pay off expenses, who is responsible for what, what bank account to use, and other considerations. Be as detailed and specific as possible not because you don’t trust your partner(s) but because you want to answer all these questions in advance.
If you fail to plan these things, you are potentially creating problems down the road. It’s going to open the door to conflict and disagreement because while you may have similar ideas of how the relationship should be going and where the business will go, somewhere, you may still have differences in understanding. You will not be entirely on the same page unless you all spell out on paper (and in advance) who is responsible for what and which role each party will have to play. Doing so will help promote a beneficial joint venture relationship and a successful one at that.
Do you want a joint venture partner who has more say in the strategy, the profit-sharing, the risk, the return of the business? Or would you prefer to have an investor partner who won’t be giving business input other than access to fundings that help your business grow? Pick whichever is right for you.