If you are in the construction business, you may have been tempted to tackle a larger-than-usual projects, but your resources and manpower can’t stand up to the challenge. In these instances, considering a joint venture may prove to be beneficial for the growth of your business. A joint venture may allow you to handle larger projects that may be outside the realm of what your company normally does. Luckily, there are countless construction opportunities out there that require multiple companies for its completion. This article discusses the advantages of partaking in a joint venture, and shows how construction companies can use these partnered projects to expand and grow their business.
Ability to Bid on Larger Construction Projects
Joint projects allow for small or medium sized companies to bid on larger construction projects that they otherwise would be unable to execute. Often these projects need a variety of construction capabilities, and finding where your company fits in is the first step. Additionally, joint ventures may require financial commitment as well as the resources of your company. By collaborating on larger projects, your business becomes more versatile and is exposed to more specialized aspects of construction that you may not be able to undertake on your own.
Ability to Partner with Minority-Owned Firms
Joint Ventures also provide the opportunity to partner with minority-owned companies. These extremely specialized projects often come with government funding, which can help with your company’s costs and expenses. Apart from reducing costs, taking advantage of special interest designations allows your company to gain exposure into niche segments that you wouldn’t ordinarily be working with. This only works to further your company’s reach, and gain association with a variety of charitable, environmental and social causes.
Access to Geographic Locations
Joint ventures allow your business to expand in the physical sense as well. When a company collaborates with investors, financial institutions, architects or engineers, your business is able to gain recognition in other parts outside of where you typically operate. Joint ventures have the ability to grow your construction company from local levels into other cities or towns, and eventually into other parts of the country.
Access to Specialized Knowledge
Partnering on a project also expands your company through education. For construction businesses that focus on a specific sector of the industry, joint ventures provide you with access to specialized knowledge that partnering companies can teach. This helps familiarize your workers with new aspects of the construction industry, and provides your business with avenues for expansion. Gaining access to specialized knowledge can also help you land new projects in the future.
Access to New Markets
When a joint venture handles a large scale project and completes it successfully, it will gain recognition, allowing your company access to new markets. This advantage bodes well for smaller and medium sized companies who are collaborating with larger corporations. By being associated with well-established brands both in construction and other industries, you are opening up the doors to new markets and possible projects in the future.
Sharing Risks and Costs
Joint ventures provide construction companies the possibility of mitigating the financial costs of a given project. Along with expected costs, joint ventures allow multiple companies to share the impact of risk, which ultimately limits its effects. Risk and losses are shared between the partners, avoiding irreversible organizational damage. Furthermore, sharing in the risks and costs also allows for bolder and more daring projects that a single company may not be able to execute alone. Click the link for more on how to mitigate operational risk click.
Access to Specialized Staff, Technology and Finances
One of the main reasons why smaller construction companies prefer to collaborate with investors, financial institutions, architects or engineers is because it enables growth in terms of staff, technology and finance without having to borrow funds or look for other investors. If you don’t have the right staff to execute your marketing strategy, you can take advantage of the joint venture’s specialized staff or customer database to market your products and services. As a partner in the collaboration, you also have the benefit of joining forces in purchasing, research and development. Click the link for additional information on the latest trends in construction technology.
As the owner of a construction company, you will be able to handle other businesses outside your jurisdiction, since much of the commitment can be covered by external partners. You can also use increased flexibility to allocate your resources to various other projects and continually help grow your company in the process.