Friends as Partners

I have written several posts about the challenges of being in business with family. Another situation with its own set of issues is going into business with a friend. I see this happen time and time again with young entrepreneurs. Three buddies sitting in their dorm, at a coffee shop, or in a bar decide it would be a cool idea to go into business together. While it is important to know and trust your partner, many friendships have other baggage that can create real problems, particularly in times of trouble in the business or as the business grows.
Startup Journal has an article on friends as partners in which the author asserts that it is the “easiest way to start a business enterprise….(and) also one of the easiest ways to end a friendship.”
When I see friends in my office who want to start a business together, one of the first things I say to them is that they have to be prepared for the fact that the odds are pretty good that they will no longer be such good friends in a couple of years. There is also a chance that they can become better friends, but it is at best a coin toss as to which way it will go. Of course, that speech usually falls on deaf ears since that would never happen to them.
It even gets more complicated when three or four friends go into business. Alliances begin to form from the beginning that undermine the foundation of trust in the overall partnership.
So who do you go into business with if not friends. Well, the friendship may not be the problem in and of itself. In fact, I think it is necessary to be friends with your partners to have any chance in the long run. But there needs to be more to it than that. It is a necessary condition, but not a sufficient one. It is like a marriage; love is never enough by itself to insure long term success.
Friendship should be the foundation, but here are other issues to explore before “tying the knot”:
– Do your share the same vision for the business?
– Do you share the same aspirations for the business? Does one want to build an empire while the other create a simple lifestyle kind of business?
– What are your work habits and work ethic? Are they compatible enough to keep the partnership feeling fair to all the partners?
– How much time off to you plan to take each day, each week, each year?
– How much money will you put into the business?
– How much do you expect to get out of it?
– Who will be the President of the company? What roles will the other friends play?
– How will decisions be made?
– What is everyone’s credit rating? Can all help to guarantee a loan, if necessary?
– What if one of you gets married and the new spouse gets a job offer in another city? Would you move away?
– What are your core values and how do you want to see them play out day-to-day in the business?
– How will employees, customers, suppliers, etc. all be treated?
– What will you consider to be real success in this business?
There are probably countless other questions to talk about, but this is a start. Talk. Talk some more. Listen to your gut if you don’t like the answers you hear from potential partners. Go in with your eyes wide open rather than with stars in your eyes.
Partners should be friends, but friends to not always make good partners.