Tuesday, March 27, 2012

SMEs must embrace joint ventures to win government contracts

By Brian Ssenoga

As the old adage goes that,"the larger stones do not lie well without the lesser” it is in this spirit that all Small and Medium Enterprises (SMEs) must carry with them in order to win business from government which is arguably the biggest employer and has the juicy deals in the land.

Procurement experts say that that for SMEs to win business from government they must fight by all means to join big companies in joint ventures, because by teaming up with others small businesses can extend their market reach.

“If properly chosen and implemented, a joint venture can be a great method for a small business to get in on opportunities and profits that otherwise they would miss out on. Big companies know the tricks of scooping business, so for small companies to learn the same they must team up with the big boys” advises William Jjemba a procurement expert and director Inter Africa Multi foods ltd

He continues that big enterprises have a lot of information, resources and capability plus the long term credibility created within their line of operation thus by working together on the same project a small company obviously capitalises on the fact that it accesses new markets in the future that would be inaccessible without a partner

The web defines a joint venture as a strategic alliance where two or more people or companies agree to contribute goods, services and/or capital to a common commercial enterprise.

Sounds like a partnership, but legally joint ventures and partnerships are not the same thing. The main difference between a joint venture and a partnership is that the members of a joint venture team up together for a particular purpose or project, while the members of a partnership join together to run a business in common.

Thus each member of the joint venture retains ownership of his property and shares only the expenses of that particular venture

According to Stephen Omoding, a lecturer of procurement studies at Buganda Royal Institute of Business and Technical Education-Mengo, a joint venture can sometimes seem like more work than it’s worth due to the fact that it takes time and effort to build the right relationship and managerial problems are likely to rise if the objectives of the venture are not very clearly communicated to every involved. There is also an imbalance in levels of expertise, investment or assets brought in the venture by the different parties.

“However, all that can be dealt with and business owners who think in this style probably have a mistaken mindset to be in business in the first place. If a business owner is on the lookout for advantages, a joint venture may be in the cards and just the thing to create those merits, small companies have access to larger markets, access to technology and resources and also build credibility” says Mr. Omoding