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.

Small Business Trends has a guest post by John Wyckoff on the growing economic power of China.
“Here’s what I suggest you consider. There’s no way any industrial nation can complete with a country whose workers average 61- cents per hour and whose engineers (who were educated in this country), work for the equivalent of $100 a week. With so many American manufacturers partnering with Chinese makers in order to control costs, the Chinese makers are gaining the advantage of technology given to them by their partners.”
This trend may prove to be the real test of our changing economic paradigm in America as some fear. But, as long as we lead in entrepreneurship and innovation, and let our free markets work, there will be new markets for us to pioneer.

When we started our health care business I had no experience in that industry. Now normally that is not advisable. However, there are ways to overcome a lack of experience.
I had two partners who were very experienced in health care, so that helped quite a bit. But, I also tried to learn as much as I could from those who worked in our business. In fact, when one of our facility managers had to be let go, I was the only person who could possibly step in and run the business until we could find a replacement. Luckily, I had spent time with the staff and had built a certain level of trust. They took me under their wings and helped me make it through a very difficult time in our business. I learned so many important lessons during those few weeks about the health care business from working side-by-side with our staff as they cared for our patients. It made me a much more effective leader as our company began to grow.
On a similar vein, Bizjournal has a story about an entrepreneur who bought a plumbing business without ever having worked in that industry.
“As the new owner of Superior Mechanical Inc., a local commercial plumbing company, Richard Drennen had ambition and energy aplenty. What he lacked at the time of the 1999 purchase was knowledge of plumbing – commercial or residential.
“In the ensuing months, he labored on the work site alongside his employees, resolving any credibility concerns they might have had.”
Knowledge and experience of the type of business you are starting or buying are certainly important to have. But, a lack of either, or of both, can be overcome.

An article at NFIB offers some good advice for solo entrepreneurs on how to connect with other people to improve their businesses. Isolation can lead to decreased creativity, obsessing over little problems, and ignoring big issues through simple denial. One approach to overcoming isolation is to connect to others in your industry.
“(O)ne of the best ways to develop a network of colleagues who understand your business is to join a professional association. Look for organizations that hold regular meetings in locations that are easy for you to get to. You can forge deeper contacts if you go beyond attending meetings by volunteering to serve on one of the association’s committees.”
I found that a group of entrepreneurs from other industries proved to be a valuable source of ideas and support when I was in business. We met through the Chamber of Commerce, but set up our own monthly advisory group. We dealt with issues ranging from finding time for our families to the right way, implementing layoffs, firing a customer, and even the right time to sell a business.
“Don’t forget professionals outside of your field. They can be good brainstorming partners for universal business problems, such as dealing with late-paying customers or deciding whether to switch from cable modem to DSL. People in other industries can also be good sources of new-business referrals.”
The article correctly points out that the benefits of building support systems go beyond improving the performance of your business.
“Hashing out business problems with others can improve your family life, too. You will be less likely to bring your work frustrations to the dinner table.”
It is not just the solo entrepreneur who should worry about the effects of isolation. We had hundreds of employees and I had two partners, yet there were times I felt completely alone. Build a network of people who provide support and advice no matter how big or small your business.

RFID Weblog is hosting COTC this week. Visit early and visit often. A great collection of posts, as always

When I was in Business School back in the 1970s there was still some residual discussion of what was known as the Trait Theory of Leadership. The notion was that certain traits, many of them physical, are related to effective leadership. Leaders were thought to be white, male, at least six feet tall, and had good heads of hair (I kid you not). I was feeling pretty good until the hair thing came up….Of course, the only reason that most leaders looked that way was because those were the only traits we would look at to find potential leaders. We learned that real leadership was a set of behaviors. And these behaviors could be learned by almost anyone.
Entrepreneurship went down the same for quite a bit longer than leadership studies. For years we tried to identify the traits of the most successful entrepreneurs. Although no data ever supported any specific traits, it just made sense to people, so this theory stuck around.
Finally, we learned that successful entrepreneurs followed, you guessed it, certain behavior patterns that also predicted their success. They planned, assessed opportunities before jumping into a venture, they secured the right resources at the right time, and they were effective at managing growth. And, yes, they were effective leaders. All of this can be learned.
Now I am the first to admit that certain types of people might be drawn to be leaders or entrepreneurs. However, this is true for a lot of other vocations, such as airline pilots or surgeons. But would you want someone flying you to Los Angeles or cutting open your brain just because they are drawn to these professions?? Of course not! We want them trained and educated. So, too, with leaders and entrepreneurs.
I don’t care why entrepreneurs end up in my classes or in my office. I only know that once they are there it is my job to help give them the knowledge, skills and tools to be successful. What gets them to me is irrelevant. Drive alone will not create the highest potential for success.
But, my fellow academics, at least those who are career academics, seem to be drawn to entrepreneurship by some vicarious need for excitement. I see it every time I go to a national meeting of entrepreneurship educators. Those who have never made a payroll seem drawn to the most hair-raising stories of near entrepreneurial failure like rubber-neckers on the freeway. They are thrilled by entrepreneurs who pursue their vision with reckless abandon.
The latest example seems to be a book titled The Hypomanic Edge: The Link Between (A Little) Craziness and (A Lot of) Success by a Psychiatrist named John Gartner (featured this week at the National Dialogue on Entrepreneurship). He contends that it is genetics that drives people to become successful entrepreneurs.
You are wrong; dead wrong, Dr. Gartner. Personality may draw folks to become entrepreneurs to some degree, but it is hard work and education that gives them the greatest chance for success.