Thinking of Starting a Business with a Good Friend?
Tip: Unless you take time to truly evaluate, you may risk losing both.
Fred: Annie Jennings PR recently wrote us saying we are a dynamic duo. We have been receiving feedback like this from many of our listeners as well as those we've interviewed since we started our radio show 7 months ago.
Lyna: I remember the day we were sitting in a restaurant talking about how much fun it was for me to be on your local show, and we got some good feedback from others as well. You said, “lets co-host a radio show together,” and that's where the concept of Growing Your Business started.
Fred: Believe it or not, this scenario takes place across the world on a daily basis. Someone thinks of a business idea and asks a friend to be a partner in the venture.
Lyna: If only it was that easy. After all, you know you get along well with your friend. He/She may even have a successful track record in business. But this does not guarantee a successful business partnership between the two of you. Fred knows this from his own experience.
Fred: Unfortunately, I do. Many years ago, I had a small successful business in Florida. I wanted to expand, but I needed some big bucks to do it. One of my employee's father had become a good friend of mine. He agreed to be my financial backer if I made him a partner.
Lyna: Why didn't this work out?
Fred: My friend's son got sick, he brought his wife into the business, and he began bossing me around. Although he wasn't skilled in the business like I was, being young, I caved in. Of course I also had made the mistake of giving him a 50-50 split.
Lyna: Reminds me of an article I read in a business magazine a couple of years back. It stated there are certain events in peoples lives that may start to cause partner disharmony. Among these are divorce, bringing a spouse into the business, a partner wanting to take more money out of the business, or even a sudden growth in the business.
Fred: And yet there are partnerships that were started by friends and do work. Look at some of them that we interviewed on Growing Your Business.
Lyna: You're right. George and Miliian, the founders of Alltalk Radio (www.alltalkradio.net), were school buddies; Jackie and Kirsten met at work, became friends, then branched off to start their own company (www.jandkdesigns.com).
Fred: And don't forget the spa guys, Keith and Andre (www.prestoninc.net). These guys are partners in life as well as in business. So what makes these three partnerships successful?
Lyna: Syndicated columnist Jane Applegate wrote: "You want to compliment your weaknesses with a partner who is strong in the areas where you're not. So if you're a great salesperson but you hate keeping the books, consider a partner who is very comfortable with bookkeeping and record keeping. If you like being on the road and doing business development and sales, it might be good to have a partner who likes to stay in the office." I feel all three of the partnerships we've mentioned have accomplished this.
Fred: What about us—the Dynamic Duo? We compliment each others strengths and weaknesses, even down to writing these Blogs.
Lyna: We are also very open and candid with each other, as well as committed to this business.
Fred: Because we are friends, it would be easy to be casual about certain agreements. But business is business and formal documents do need to be legalized.
Lyna: It's good business to do so. If nothing else, it is a way to protect your family should anything happen to you.
Fred: Inc.com had a great article last April called, "Choose Your Friend—and Partners Wisely". It included questions to ask the friend you want to go in business with to make sure your goals and level of commitment are equal. Questions like, Why do you want to go into business?, How much time do you intend to spend in starting and growing the business?, What strengths do you bring?, What income do you currently need to make or want to make?
Lyna: Among the questions, I really feel one is key—Would your friend start this business alone? If he doesn't share your passion, do you really think the partnership will work?
Fred: The truth is a business partnership is like a marriage. Would you go out and buy a new car or apply for a mortgage without your spouse's knowledge? Lyna and I keep in constant contact and we copy all emails sent and received.
Lyna: You are getting better at that! When Fred and I face minor disagreements, we deal with them in a straightforward, efficient way. Communication is key to success.
Fred: Should you go into business with a friend or not? Assess your relationship, your business styles, and goals and chances are you'll keep that friendship no matter how you answer any questions.
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