Never go into business with friends. We've all heard it before – this snippet of advice has been uttered countless times, given in grave tones that allude to apocalyptic scenarios. And with good reason. Yet that doesn't stop some from attempting to make it work.
When childhood buddies or newfound social allies decide to work together, they either create a whole new entity to be built from the ground up, or else one employs the other. For the former, grandiose visions are often at play – late night rambling turns into strategisation, investment and fruition. For the latter, a chance to help out a friend is frequently deemed important enough to shift the pre-existing relationship into a more serious sphere.
A pair may make for wonderful friends – there for each other through thick and thin – but in business, affection can quickly turn to resentment. When lost money or lost respect is involved, friendships too can be lost forever. In the meantime, the business could have crashed and burned during the fallout, or may have never even risen in the first place.
A pair may make for wonderful friends – there for each other through thick and thin – but in business, affection can quickly turn to resentment
Shared visions
Before going into business with friends, there are a number of things to consider. First, the vision of the business: discussing each other's long-term plans and goals is crucial. This is the stage when red flags may arise, and if they do, it could be time to leave. Another deal breaker is divergent ideas about what the company's values should be, as this will simply not change over time.
According to Marissa Levin, culture and strategy expert and CEO of Successful Culture: “Like any relationship, it all comes down to aligned expectations, and healthy communication. All relationships go south when expectations are not aligned and when communication is poor or unhealthy.”
Aligning expectations involves a clear definition of each person's role and responsibilities. This will ensure no stepping on toes, nor duplication of work (both of which could rouse resentment), while also playing to each individual's strengths. This consideration also helps individuals pin down their weaknesses.
Again, this could be a red flag: if someone has a bad temper but insists on being the face of the company, it could be a recipe for disaster.
Levin advises: “Ask yourself, ‘would I hire them if they were not my friend?' Do they have the skills, experience and capabilities that I require for the position? Will they fit into my culture?' Apply the same level of scrutiny to them that you would any other hire.”
Just to be clear
Before embarking on a new enterprise together, having an exit strategy in place is crucial. This is not in expectation of things going wrong per se, but more about people's wants and needs changing over time. One partner, for example, may realise that the stress that comes with running a business is not for them, or could suddenly decide to move to Timbuktu.
For any scenario, a plan must be devised to split assets in correlation with the time and money that has been devoted to the company. Having all scenarios prepared for ensures that there is no resentment or undue losses, and that the transition is smooth.
Though responsibilities, exit strategies and money-related issues can be countersigned in a contract, there are other elements in a business partnership that come down to trust alone.
Asking questions about whether the leadership – and therefore the brand – can remain unified at all times is vital for its success, but staying united through difficulties can test even the strongest of friendships.
As such, communication is key. Not wanting to hurt one other's feelings (which is more likely among friends) cannot get in the way of being frank about potential issues. Levin also advises a degree of realism before going into the partnership: “Ask yourself if you are truly willing to change the dynamic of your relationship, because it will change. Don't go into it thinking it won't. It will.”
Though it seems that, with so many potential pitfalls, going into business with friends is simply not worth the trouble, when done properly, friends can make for the very best of business partners: “You always have a cheerleader/support system and it can feel much less lonely,” Levin added.
Celebrating successes together and supporting each other through hardships is priceless. And as history shows, this, along with an understanding of one another that only comes with friendship, can be the foundation that enables truly spectacular things to happen.
