Joint Ventures with Friends?
Some food for thought before jumping in…..
So you’ve known each other a long time. Shared many laughs and many secrets. You’ve raised your children and been there for each other and them in times of need. Your parents even consider him or her as an honorary son or daughter. You get the picture? You’re all tight, so tight that you think it’d be a wonderful idea to go into business and it’d be a good idea if this other friend joined us too. So does the same criteria for friendship work for becoming business partners?
Here are a few things (Part 1) you may want to consider before you take a personal relationship to another level, a business level:
1. How well do you really know this person? What red flags have come up in your knowledge of them that might be a red flag for business? For example, what’s been their track record in money management, managing debt, managing abundance or making money? What about record keeping when it comes to money. Is their financial life in a carrier bag? What about how they’ve dealt with conflict or disagreements. Do they throw their toys out the pram and not speak to whoever for weeks? Do they get physically or verbally abusive? Do they talk about what’s bothering them and seek resolutions? As the saying goes: ‘How you do anything is how you do everything!’
2. What are their values? Are they consistent with your own when it comes to honesty, integrity, having high standards, being organized? Mind you, you and your potential partner needn’t necessarily have these values but it doesn’t mean you couldn’t do business. It just means the ‘business’ might be something you’re prepared to go to jail for. Check out their values. Not seeing it important to comb your hair every day or make the bed may not be as important as not wanting to register the business or not wanting their name on the bank account. There will be deal breakers amongst you. Raise the conversation from the outset and keep talking about it.
3. What are their skills? What is it about what they do well, that makes you think they’d be a good business partner? You don’t know?? Have you ever done a skills audit on yourself or them? Do you think you know them so well you could complete THEIR skills audit for them? Friendship is organic and is not built on terms, conditions or skills set. They form out of a variety of circumstances; where you met in a physical place, your children could be friends, you met online, became members of something of mutual interest etc. These are all circumstances that do not require any initial memorandum of understanding. You just like the person. You get on. You click. So through your friendship you know a bit about their skill set. So what about the skill set that’s business worthy?
4. Is the friendship strong enough for when things start to go very wrong or very right? Did you go into this business with love and wishes in your heart assuming the journey will be of peace joy and happiness and we all want the same thing? Consider making a contract, a code of honour and creating mechanisms for handling disputes. If you can’t agree how you want to handle any disputes then hey, that’s red flag right there! Think about what you’d NEED to include. This is the business pre-nup and we know in the personal lives of many, the consequences of not having this when a situation is beyond repair. Incidentally how DID it get to that stage?
5. Character. Everyone has it. Is it compatible and complimentary? Remember I talked about how people react when they’re in conflict? What about if they’re tired or stressed? What’s their timekeeping like? Attention to detail? Always having a coke and a smile and not pulling their weight? What’s their dynamic in the team? Team player, shirker or bandwaggonist – always the last to comment and tends to ride on other people’s ideas not bringing any of their own? How do they handle pressure – not just in terms of meeting deadlines but generally in life and in a customer orientated situation?
6. What are your deal breakers? Are they insurmountable or can they be overcome? Most women hate when men leave the toilet seat up but they’re unlikely to file for divorce on those grounds. Deal breakers can relate to aspects of character, behaviour, values or skills (lack of) that will engage you in thoughts of ending the contract, or better still stop you from entering into it in the first place.People have been known to have affairs with business partner’s spouses but it did not end the business relationship – so what are your bottom lines? Each of you should make a list and discuss them.
7. Who is in charge? All of you? One of you? Is this reflected in the contract? How are different aspects of the business managed? Is one person keeping the books? The other handling marketing? Who is responsible for the business products and stock? Again, have the conversation, refer to your skills audit and character traits.
8. Who did you say was in charge? Remember in any type of group situation it is natural for leadership to emerge. So what happens if it’s not the named person you agreed on? What happens when roles begin to get a bit blurred? Again these are dynamics that can emerge by stealth. It may be something you’re all ok with and can see it’s beneficial to the business. On the other hand resentment can build up, the group dynamic begins to sour and then you’ll be at my last sentence in no 4 above.
9. Business partnerships with anyone be they friends beforehand or otherwise are like marriages without sex – but with the love and commitment. That love can be in the respect you have for each other and what each brings to the table as well as a great passion for the business itself. And like marriages, they all need work. So as much as possible in your pre planning consider all possibilities in the event of sickness and health. Life doesn’t go according to your business plan (Did you do one by the way?) but the stronger the planning, preparation, vetting and pre – nup reasonings (which should be a continuous element of the relationship) then the more chance you’ll stand of being the success you dream of.
10. Think, then take action. Make a list of actions you will take relating to each of the above points. Set dates for deadlines or reviews. In part 2 I’ll be providing some tips on things such as skills audits, building shared visions and values and resolving disputes.
To your success!