Your friends should be a known entity, plus you probably already have a good idea of your friends’ work ethic, their knowledge, skills, and abilities. In addition, you may also know how they manage time and money, which provides a big advantage over going into business with someone you only marginally know. If you have a friend whose skills compliment your own and who shares the same vision for a business that you do, you might have the foundation necessary to be successful. Another advantage to friends becoming business partners is that friends already share close communication and should not shy away from speaking directly to when needed. A partnership also allows you some breathing room from a financial standpoint, if your friend has money to invest in the business. Even a friend who is short on cash but has good credit can still contribute to start-up costs by obtaining cash advances for business expenses.
One of the most common problems with friends becoming partners is that friends are more likely to take advantage of another friend in a way they would not a known partner or a boss at a regular job. Friends may not adhere well to business hours, take long lunches and want more vacation than is feasible. Friends may also do things such as bring their children or pets to work with them, even though they would never consider doing so if working for someone else. Friends may also want to employ family members or friends that are not suitable for the job.
All of the listed behaviors are disrespectful to the other partners, but your friend will likely not appreciate or accept these non-wanted behaviors when you point them out. Because of this fact, friends will often hold their tongue about another friend’s bad behavior rather than create conflict. Unfortunately, this failure to clear the air creates stress and a buildup of frustration in the partner that feels he is being taken advantage of.
No matter how a partnership is legally structured, one person still has to have the final say in business decision-making. If you don’t agree with the way your friend wants to take the business, you must be prepared to go against him for the betterment of the company. Unfortunately, someone who knows you on a personal level can also attack with personal items if he feels provoked to that point. A disagreement about a business matter can easily deteriorate into a fight at a personal level if the partners are also friends.
How to Avoid Conflict
When it comes to choosing a friend to become business partners with, you must choose wisely. Assess each of your friends’ abilities and skills and choose the business partner(s) that fill gaps in your own knowledge or abilities. Partners who all have the same single skill are apt to argue about how to apply that one skill and neglect all the other work that needs to be done.
Create a list of all the business functions that must be covered and assign a partner to each function. Be fair with the assignments, allowing each partner to contribute to an area of interest as well as the general business operations. Set boundaries concerning work and personal interaction. A good policy is to never discuss work on personal time and never discuss personal issues during work hours. That way, you can keep your personal life from interfering with your business and your business from interfering with your personal relationship.
Determine the financial funding up-front and put it in writing. If one person contributes more money to the business, they should get a larger share of the business profits or less working hours in return for their investment. Draw up legal documents that cover all your business agreements before you start the business. It’s much easier to avoid hurt feelings if everyone knows up front exactly what they are expected to contribute and in what form.
References & Photo Credit
- Belmont University – https://forum.belmont.edu/cornwall/archives/002329.html
- NFIB: 5 Tips for Working With Family and Friends – https://www.nfib.com/business-resources/business-resources-item?cmsid=50695