Do’s & Don’ts of Doing Business with Friends

As an entrepreneur, we are given a huge gift – freedom to make our own choices. But with that freedom is a big responsibly – choosing the RIGHT people to do business with.

It usually goes something like this.

You and a friend keep feeling “synergy”. So you look for ways you can create an offering to harness this synergy. Perhaps you see how you both have an expertise in a certain area – and putting a program together could bring in big money and success that you both desire. Or maybe each of you has a skill that compliments the other – and if you just put your two heads together you could accomplish so much more.

With all the excitement and anticipation of a new found love affair, you move forward to launch this great idea. Then, slowly, you start having conversations about when you’ll get paid, how come that task isn’t done yet, and how you are doing all the work. The spark of that relationship has been replaced with a smoldering resentment.

Being in business with another person should not be taken lightly. During my entire 12 years in business I’ve coached lots of couples – married, friends, family members – in business only to discover that they said yes to business when they should have said no.

If you feel called to take a family or friend relationship into a business arrangement, here are a few do’s and don’ts to help you kick off on the right track.

The Do's

1. Set up ground rules. How will you handle inevitable situations like making a decision when you don’t agree? Who will keep the money? When will you each get paid?
2. Have a written agreement about your business relationship that includes a documented exit strategy. Trust me on this one. Even co-creating a book or one-time coaching program can get sticky if you don’t agree on how to end it.
3. Keep things clean. Consider setting up a separate entity and bank accounts if you are dealing with more than just a couple of financial transactions.

The Don'ts

1. Don’t pretend that they are good partnership material if you already experience signs that they are not – poor communication, abandoned commitments, issues with time management, etc. These issues will only get worse and will become a problem zone.
2. Don’t try to make someone good at what you are not…just to make the partnership work. If you are both good at the same things then a) hire out the roles that you are lacking in or b) find a partner who does compliment you.
3. Don’t move forward if you are starting with an unequal power dynamic. When one person considers themselves more important, valuable or the greater asset in the relationship, a power struggle will inevitably occur down the road.

What have you discovered trying to do business with people you know -- share the good, the bad, and the ugly in the comments below!