Doing Business With Friends – Could It Work?

doing busienss with friends Doing business with friends can sometimes have negative results despite our best intentions. Even with our best hopes, what starts out as a seemingly safe and mutually-beneficial project or interaction can turn into anything from a minor embarrassment to a major nightmare.

I’ve always been thankful for having good working relations with others. I’m very receptive of working with others, as it’s an opportunity to get two thoughts, opinions and another set of eyes on an idea. This works best with people who have the same desire to succeed as yourself. But what happens when the other party doesn’t hold up their end of the bargain? Well, let’s just say that I become extremely difficult to work with at that point.

While doing business with friends may seem like a superb idea at first because you already know the person, you have someone to split duties with, split expenses with – the whole superb idea can turn into a disaster very quickly. Sadly in most instances partnerships between friends don’t work out in the end – not everybody has the luck of Disney and Google. In order for a friendship-based business to thrive and survive, there has to be an understanding what each party brings to the table, their strengths and weaknesses, and how each partner can help enable one another in a positive manner.

My Story

Three months ago I joined forces with a friend to start a business together. At first the business idea was flawless – start an online community targeted at a specific ethnic background through news outlet and turn the online community into a local newsprint that can be distributed locally at select shops and businesses.

The hopes, ideas and thoughts were all there, and getting into business with a friend who’ve I’ve known for over fifteen years seemed too logical. It would cut down my learning curve of working with someone new, trust was already established, there was someone to split the workload with, someone to push me when I needed a push and someone to add some necessary speed to the project.

Unfortunately despite the best intentions from both sides, this partnership has had it’s growing pains due to one’s inability to hold up their end of the workload.

We’ve all got strengths and weaknesses, but if you want to contribute to a project you gotta show face. Standing on the sidelines while waiting for someone else to delegate a task certainly won’t do it. If you’re unsure what to do, just ask!! How can I contribute? What would you like me to do next? Would you like me to do this………….? So, needless to say that it becomes exhausting to do your own work, while your partner sides on the sidelines waiting for direction, and when direction comes, deadlines are missed and you’re greeted with half-ass excuses.

So what does one do? I could walk away and save a somewhat damaged friendship. I could sit tight, and hope that one will pull up their pants and step up or maybe I should turn a blind eye. What would you do?

Common Pitfalls of Doing Business with Friends

Difficult to Reverse – Once you remove the “arms-length” and start doing business with people who are close to you, you often start down a course that’s hard to change or reverse. Whether it’s setting expectations or creating problematic assumptions, changing or getting out of friends/family dealings is much harder than business-as-usual.

Inability to Find the Shutoff Valve – There are people who can completely shut off work and draw a solid line across their lives when they close the office door behind them. Unfortunately I’m not one of those people. I’m always thinking, writing things down and sometimes carry multiple notebooks with me to write ideas down during dinners and other outings. Even though I admire those who have the ability to find the shutoff valve, I know very few of them. The rest of us inevitably bring our working lives home with us in one way or another. When you do business with family and friends, at some point you’ll be with them at a barbecue, birthday, cocktail party, or wedding. If there’s tension brewing between you, aside from your own discomfort, it will affect – and potentially infect those around you.

Finances – Anytime you start a business, one needs to be prepared to invest money they’re prepared to lose. You may know this basic business 101 rule, but does your partner? I’m sure most people do feel that way when they put their money in the hands of a friend. But what happens if the money goes down the drain? You or your partner may say “Hey, don’t worry about it, I took the risk,” but in all likelihood your relationship will forever be tainted.

Firing Friends is Hard – How do you fire someone who you started the business with? It’s hard and at times impossible. Despite your best intentions, often parties associated forget that business has a way of coming between the best of friendships, and can often be difficult to shake negative feelings due to bad business decisions. Your schedule won’t always match the schedule of your partner. He or she may take more time off than yourself. Their contribution may not be inline with yours. Basically many reasons could come up to fire your friend, but doing it is the hard part.

The Relationship is Always Tested – Just like in any business matter, no matter how foolproof you think a plan may be, it’s wise to assume things can and will go wrong. And “friendship wrong” can be much worse than “business wrong.”

Final Thoughts

Doing business with friends is a personal choice that can only be made by you. It’s important to remember that you should find businesses partners based on merit and not the personal relationship with you – I’m learning this now. The biggest issue with doing business with friends is that you’re risking the friendship it self. If you’re partner is not pulling their weight, you begin to feel that you’re somehow being taken advantage of and eventually feelings of resentment surface. Eventually this leads to you to believe that the person you knew, isn’t really who you thought they were.

As much as I enjoy working with others, collaborating and sharing ideas, I’m also very straight to the point and don’t have an issue voicing my opinion. Unfortunately this makes most people get on the defensive. Having an understanding that the friendship comes first is important, so the relationship doesn’t get thrown away.

Doing business with friends can be a slippery slope and that isn’t for everyone. Even though I’m learning my lesson, I’m beginning to realize that business-is-business at the end of the day, gotta respect yourself and the contributions.

Thanks for reading!

Eddie

Comments

  1. I think doing business with friends is possible, but everyone just has to make sure that everyone is on the same page. An operating agreement is always a good idea also.
    Michelle recently posted..So You Want to Be a Freelance Writer?My Profile

  2. I have cold feet about this after having a particularly hallowing experience when I was younger and dumber and just jumped into it. I’ll never do that again!
    Daisy @ Add Vodka recently posted..The Many Inspections Needed When Buying an Older HomeMy Profile

  3. I would never go into business with a friend. Differences in opinions on how to run things can end up ruining a friendship.
    Sean @ One Smart Dollar recently posted..The Downsides to Common Frugal TipsMy Profile

  4. I went into business with a friend 7 years ago, to this day we are still good friends and sometimes working together. The key was as-is communication, if we were really annoyed at each other we would say it straight, and also a clear division of task, we didn’t work on the same thing together, he was in sales and I was in marketing, accounting, back office. To each his territory. Generally I would advise against doing business with friends but that was a good exception.
    Pauline recently posted..13 money resolutions for 2013: #8 be happy!My Profile

  5. Very nice article Eddie! Going into business definitely can be tricky, especially if there are problems that arise and they generally do as with any business. We’ve done a little of this with our business, but really try not to as it’s generally not worth losing a friend over.
    John S @ Frugal Rules recently posted..Reader Question: Should I Invest in Mutual Funds or ETFs?My Profile

  6. I wouldn’t go into business with a friend. I value friendship more than I do a business relationship. I was in business with a family member and it was going sour, so I quit and walked away. It was the best decision I could have made. It salvaged the relationship and the business is still going. If it were me, I would take the time to find another partner (not friend) and then move on. Good luck Eddie!
    Grayson @ Debt Roundup recently posted..Two Common Debt Reduction OptionsMy Profile

    • True that. My friend and I split the cost for signing up at some binary options brokers we were considering. Everything was going well until we lost a huge amount of money. We were planning to raise money to get a couple of websites to get into affiliate marketing, but when the money went “poof!”, so does our friendship. Even though it was a mutual decision, we’re still not in good terms.
      Ardine recently posted..Forex Binary OptionsMy Profile

  7. Hmm, business and friends could work but if you don’t have the same work ethic you are sure to see one person get fired up. I am a confessed workoholic as I do love to work. I struggle to shut off like you and am always thinking what my next move will be. If I had a partner in business who was not like me I’d struggle. I don’t want to have to light the fire under someone’s arse and lead them every step of the way. It doesn’t mean that their work ethic is wrong, it may just mean what you value as working “harder” and “smarter” is different. That’s just me, so I would have to consider the person I’m partnering with and if I don’t know their work ethic well enough I’d likely back out. No sense jumping into something you really don’t feel comfortable with especially if $$$ is involved. Good Luck Mate.
    Canadianbudgetbinder recently posted..A Personal Story:Chores and Money Lessons Growing UpMy Profile

  8. I guess it would depend on your personalities. I would probably try to avoid a business with friends or family, but over the years some of my business partners have become good friends. That isn’t quite the same, but it is hard to have an argument with a friend over a business decision and still feel all warm and fuzzy.
    Kim@Eyesonthedollar recently posted..No Spending Challenge-No Buying Clothes in 2013 and a $100 Giveaway!My Profile

  9. Great information! Going into business with your friends and family can sometimes be hazardous.

  10. Think it’s a bit too risky to consider doing much like doing business with family. You should always keep home and work separate.

  11. Nice blog.