Management skills differ for companies that go it alone vs. those using joint ventures

First-time entrepreneurs have a tendency to want to go it alone, but this may not be the best way to start and grow a food business.

Many first-time entrepreneurs are very secretive about their business ideas and concepts. Entrepreneurs consider their concepts to innovative and may be very concerned that the idea will be “stolen” or replicated before they have an opportunity to launch and earn a return from their concept. In being guarded about their concept, they may create a situation where the development of the concept or product is delayed or never launched because the entrepreneur lacks the capacity to bring the product or concept to market on their own.

Of course protecting one’s concept is important and can be done while still cooperating with other firms. Use of non-disclosure, confidentiality agreements and no-compete clauses are some enforceable ways to share ideas and remain protected.

Returns from start-up food business can be very small, resulting in the entrepreneurs making decisions on how best use their resources. Successful managers will evaluate the most profitable activities and process in their business and find other ways to accomplish the tasks that cannot complete efficiently. Good managers and entrepreneurs consider letting other firms who do have capacity complete those tasks. If you are a firm that makes potato chips, should you start production of your own dairy-based potato chip dips? In some cases a company may, but often firms will find another company to make the potato chip dip with their private label.

Cooperating has potential benefits for the entrepreneur. Each firm has to do three different business functions very well in order to be successful. Each business function requires different management skills and people are not equipped to manage all aspects of a business effectively. Many times the manager who goes it alone will not do some of the aspects effectively and the performance of the business will suffer. The entrepreneur often becomes “burned out” from attempting to do “everything.” The entrepreneur’s lifestyle will improve dramatically by concentrating their efforts into the business function that they have passion for, and will do well. At Michigan State University Extension we help entrepreneurs successfully determine the parts of business that they enjoy, and to find resources to do the functions for which the entrepreneur may not be well-suited.

Entrepreneurs who are evaluating the possibility of cooperating, need to be sure that the venture will be an added benefit to both firms, and that working together will allow both cooperating firms to achieve more than they might be able to on the their own. Collaboration may be the way to best achieve the desired results. Extension educators at MSU Extension and innovation counselors at the MSU Product Center assist businesses in the establishment of good practices to improve business effectiveness. For further information and assistance with employee communications please contact your local MSU Extension office.

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