Have you been told to never mix business and friendship? Or heard that it is “a cocktail for disaster” that will destroy your friendship, and yet despite these warnings, find yourself excited about a new business venture with your B.F.F (Best Friend Forever)? Well, if you are, you have come to the right place!
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Today’s “love affair” can be tomorrow’s “divorce” if business partners are not vetted well. Indeed, it is hard enough to know your own mind, let alone someone else’s.
So, when “courting” a friend as a new potential business partner, why not take a few days to follow this 10 easy steps to ensure both your business and friendship thrive!
- Individually write out your vision for the new business.Be sure to go into as much details as possible. Be explicit! Do not rely on your friend “thinking” the same way as you do. Consider things such as how much time each of you will put into the business (on a weekly basis), what in competitors it will have and what will you do to be unique in your market?
- What responsibilities will each of you have? What roles will each of you have? What hours will you each contribute? What is most important to you? What are your personal and professional goals? What do you hope to achieve and in what time frame? What if it doesn’t work? Do not be afraid to discuss the negatives, thoroughly!
- Clearly define what success & failure in the business means to you? What financial return do you need to survive in the first 12-24 months? Some people might have to exit out of a new business venture, if it cannot cover their day today expenses after 6 months (For cash flow reasons). For others, the size of return on their time and money may be a factor that sees them lose interest in the business. Imagine the horror of discovering your business partner wants to pull the pin on a business that you think is doing well, because their expectations are different from yours and you had not discussed it prior to the venture!
- And then there is the money bit! What financial capital is required to start the business? Where or who is that coming from? How will profits be distributed? How much will be reinvested back into the business and how much will be taken by the owners as “return” on their investment? What if you run out of money and money cash is need to keep the business afloat? How will shares be diluted or other investors bought in?
- What about what the expenses? Clearly outline what expenses the business will cover and not? How much can one partner spend without consulting the other? Clearly define a process or protocol to handle disagreements?
- Then there is the time issue? Who does what and when? What about when one partner puts in many more hours than another? How will you handle this?
- What is your exist strategy? Is this a business you want to build to sell or pass on? Go into the business with the end in mind! Do not be afraid to discuss the tough topics, like “What if one of us wants to leave the business and the other does not?”
- Then it’s time for Group Share! Once you have dumped your personal manifesto and vision for the new business on paper, come together with two copies each. Then pass the talking stone!! Read each others ideas, share the excitement, clarify points of agreement and disagreement. Once done, I recommend a good meal!! (complete with wine!) Go home and read over your own vision again, then your potential partner’s (Yes, that is why the two copies!). Do this daily for a few days and let the ideas percolate! Your first ideas are often good, but great ideas may require effort and thinking!!
- Then write it all down together! Once you have decided that you do have a shared vision, common goals and time frames, sit down together and write your mission and vision statement together along with a memorandum of understanding, outlining everything you have shared and schemed in the previous days! The more detail the better.
- Once done, find a good lawyer to help you set up the most appropriate entity (company, trusts, partnerships etc) for your venture.
Remember, it is cheaper to ask for help at the beginning, rather than later!
All of the warnings you will hear are well founded! I have seen a number of my friends have a seriously tough time together, over business ventures that have absolutely tested the fortitude of the friendship. Luckily, in most cases the friendship has prevailed, but this is not always the case!
Sometimes a relationship that starts as a friendship, heads south over a business deal that unravels, and personally, I think you are better off! Real friendship will survive these hurdles, however the people who “befriend” you for the sake or the deal or business, will pass you by! (Making more room for those that deserve you!)
Friendship and business can mix like a very tasty cocktail. Shaken not stirred!
Despite the warnings and stories of doom and gloom, and the “common belief” that business and friendship don’t mix, I have been personally blessed to have worked with my best friend for many years. In fact, I have a number of cherished friends with whom I have actively sort to create business relationships. Let’s face it, you know your friends better than most other people, and you trust them. Even more importantly, if you are a little idiosyncratic like me, they know you!!
Knowledge and trust are two powerful commodities in business, and fact worth keeping in mind, and investing into!
With this in mind I will leave you with the idea that open communication, that is heartfelt and honest rarely leads you astray. If you have a business idea that excites both you and a friend, then you both deserve to share the excitement, try it on together, and use each other as sounding boards.
Keep in mind some great friendships have combined passion and purpose with the trust and knowledge to create massive profits!
- Two friends that created Google: Lawrence E. Page and Sergey Brin
- Two friends that created Apple: Steve Jobs and Steve Wazniak
- Two friends that created Hotmail: Sabeer Bhatia and Jack Smith