Business Alliance V.S. Joint Venture

Before jumping into a strategic business alliance or join venture, it’s important to understand how either of the two could help you build synergy and gain a competitive advantage in your industry.

How are they similar?

Both alliance and joint venture involve integration through shared expenses, risks, and core competencies (technology transfer, knowledge, economic and skill specialization) that will be mutually beneficial for the parties.

How are they different?

Although both companies are involved in sharing/contributing particular resources in a way that benefit each other, they differ in its way of agreement. A joint venture is a formal and legal partnership, while a strategic business alliance is contractual and may be less formal. In the latter, you can retain full control over the firm whereas the former will have a shared ownership over a newly created company.

Examples

In the telecommunication industry, brands such as Globe and Smart have established alliances with mobile device companies (Huawei, Apple, etc.) to have an offering where both products complement each other (i.e. mobile and plan bundling).

Advantages

Having a business partner can be a win-win situation. Risks and expenses is lessened as it is now borne by two instead of one and, as mentioned, there is an open access to strategies and resources between the two companies.

Disadvantages

When a joint venture fails, it could be difficult to exit the agreement, while in a strategic alliance, there is no certainty that you will gain equal benefits and control over the other company.

Business Expansion: 12 Indicators that says It’s Time for Growth

For any start-up venture, growth will always be part of a business owner’s goals. But expanding too early can be disastrous for any business. Releasing new services or product lines, or adding new employees too soon at the first sign of growth can have devastating results.

There’s a right time for everything. For business owners, here are 12 signs that your venture is ready to grow:

  1. You have established a loyal customer base. A good number of repeat customers is a sure sign that you’re on your way to growing your business.  It indicates that your products or services are in-demand and that your clients are satisfied with the quality you’re offering.
  2. Customers are looking forward to see your business branch out. If you’re noticing a steady stream of out-of-towners flocking to your establishment and wishing that they have the same products and services in their area, it’s a good indicator that your business has room to grow.
  3. Your profits have been growing steadily for the past three years. A spike in your sales should not be considered a justification for a business expansion.  The surge in profits could be temporary.  However, if your profits are steadily growing  for the past 3 years, then you’re obviously doing something right and it could be high time you did your customers a favor by expanding your business.
  4. You have a formidable team. To handle the growth of your business, you must have people who are willing to take on the demands and challenges of expansion.  Sure, growing a business will entail long hours and possibly burning the midnight oil.  If you have a strong team who you can trust to take charge of a second location, then your business foresight is 20-20.
  5. You’re hitting targets. A clear indicator that you are ready to grow your business is when you find yourself already hitting the goals you have initially set during the starting/planning phase.  If you’re meeting your business objectives, then you’re up for new challenges.
  6. Your industry is growing, and you have a growing market to prove it. You know it’s time to expand when you have a business catering to a steadily growing market.
  7. You can no longer accommodate new customers. If you find yourself turning away more customers, or are too busy with non-core but critical functions, it may be high time to grow your manpower (and perhaps, a bigger office?).
  8. Your clients are looking for other products/services from you. When this happens, listen to them. It could be high time to add to your current line-up of products or services.
  9. You have established an operational system. If you have established an efficient system for your company, then you’re in for the long haul.  Don’t forget to document these processes in easy-to-understand manuals for easier turnover and training.
  10. Your room is getting more cramped. Find yourself hiring more people than your establishment can fit?  It could be time to find a bigger office space to accommodate your growing team.
  11. Your finances can back up your plans of expansion. A consistently positive cash flow is the foundation for a business that is ready to take on the challenge of growing.
  12. You’re emotionally ready for this big hurdle. All the signs mentioned would be irrelevant if you, the business owner, are not ready to take on the challenges of expansion.  Remember that growing your business will entail a few compromises, such as less time for yourself and your loved ones, until you can achieve normal rhythm.

Expanding your Business: Business Loans vs. Bank Financing

loan-company-vs-banksLet’s say you’ve established a decent customer base, and you’re on your way to expanding your business.  Expansions may entail costs higher than your existing capital. For cases like this, your best option would be to get a business loan.

Usually, business owners go the traditional route, i.e. bank financing, when funding an expansion or other investments.  But banks are not the only source of necessary funding to aid your business’s growth.  Non-bank institutions, such as private lending companies, can give you the same financial services. In some cases, the interest rate could be higher but is offset by other benefits that are certainly worth exploring.  Here are some of the reasons to consider business loans from non-bank lenders:

Less stringent requirements

Generally, bank loans are more difficult to acquire.  Most banks will require an established credit standing from the business owner, on top of a business plan, comprehensive financial statements, and a long list of evidences to prove the legitimacy of the business. If your business is new, it’s possible to not be able to meet some bank requirements too.

Non-bank lending companies, on the other hand, won’t let you go through the same trouble to get a loan for your business. A simpler application process will be in place with much fewer requirements.

Speedy process

Your bank loan application will go through a long process before finally getting approved.  And that’s just the tip of the iceberg.  Once your loan gets approved, you’ll have to wait for a week or two to get your funds.

Non-bank business loans will often guarantee faster loan decision in as early as 7 days upon approval and possibly a loan release within 24 hours of the agreement—perfect for cash cycle emergencies.

Flexible payment policies

Unlike bank loans, non-bank lending companies allow you more flexible payment options.  You can choose the length of loan term (short or long term), and may even earn rebates when you pay ahead of schedule.

No collateral necessary

Non-bank lending companies, too, can offer non-collateral business loans, which are much easier to obtain than secured business loans.

They believe in your growth potential

Risk averse banks will usually reject your application for business financing, should they find out that you don’t have an established, tried-and-tested credit history. In this case, non-bank lenders can be the business financing option you can turn to.

While banks may lend to institutions like Ayala and Globe, private lending companies specialize in helping the “small guys” grow to become the next big guy in an industry.

With these presented points, evaluate your business needs first. It’s always a case to case basis. Sit down with your team and try consulting with an expert to determine if a business loan from a lending company is truly a better option for you.

This is a post with post format of type Link

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Donec quam felis, ultricies nec, pellentesque eu, pretium quis, sem. Nulla consequat massa quis enim.

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus.

This is a standard post format with preview Picture

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus.

Donec quam felis, ultricies nec, pellentesque eu, pretium quis, sem. Nulla consequat massa quis enim. Donec pede justo, fringilla vel, aliquet nec, vulputate eget, arcu. In enim justo, rhoncus ut, imperdiet a, venenatis vitae, justo. Nullam dictum felis eu pede mollis pretium. Integer tincidunt. Cras dapibus. Vivamus elementum semper nisi.

Read more

Post Formats is a theme feature introduced with Version 3.1. Post Formats can be used by a theme to customize its presentation of a post.

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus – more on WordPress.org: Post Formats

Another title for our pretty cool blog

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus.

Donec quam felis, ultricies nec, pellentesque eu, pretium quis, sem.

Read more