How to Survive Going into Business With Friends
While it's not always the best idea to go into business with friends, it seems it's something many people do – no matter how many times they're warned against it.
I've attended many conferences with The SITS Girls, and learned lots about business and friends, so I'd love to pass that knowledge onto you. You know, the dos… the donts… and how to make a clean exit if necessary. The last thing you want to do is ruin a friendship over business.
Have Clear Roles
There is so much to cover on this topic, but I just want to talk to you about the basics. It's so important to have clearly defined roles from the get-go. Don't think “we'll just figure it out as we go”, because that's not going to work out so well. Each person in the business should have certain responsibilities, and there should be a set process when it comes to changing or swapping those responsibilities if the need arises.
Is it your business, and your friend is just joining it? Will s/he own half? Is she an employee or a business partner?
Do you work the same amount of time? Do you earn the same amount from each client serviced or product sold? Do you split the expenses 50/50?
How will you contribute to the business? How will s/he? Are you going to split the clients evenly, or both offer certain skills to help each client out as a collaborative effort? How will day-to-day operations run? Who will handle payroll when the time comes?
Who's going to handle the PR? The email? The social media? The website? The business card design process?
These are just a few questions you should be asking yourself – and your friend – before going into business together. After a few months of working together every day, you're bound to get on each other's nerves. Figure out a way to discuss issues without making them personal – and remember to take time outside of work to nurture your friendship, too!
Get to the nitty gritty and be extremely detailed in this process. You can never be too careful, and it's better to cover all your bases than leave one (or more!) open. Document, document, document! Have all the paperwork in place, “just in case” you ever need it. I know it's hard to think about right now, but something could go sideways down the road, and I'd rather you be prepared.
Choose the Right Friend
It's important to choose the right friend to go into business with – not based on your friendship, but based on if s/he compliments your strengths and weaknesses. You both have to be honest about what you're good at, and what you're not so great at, so there are no surprises.
If you've had disagreements in the past, and your friend has ignored you for weeks at a time, s/he's probably not the best one to go into business with. If your friend is hot-headed and tends to get into arguments with a lot of people, again, probably not the best to be in business with.
Give it a Trial Run.
Set up a contract to where you both know how long the trial is. 30 days? 60 days? How will you decide if it's working out or not? How much information will you give up during the trial period? While you trust your friend, you don't want to give away the farm – especially before they're invested in the business (past the trial phase).
Even after the trial run, you should do evaluations every few months. Whether it's just once every six months, or every other month, checking in and being honest with each other about how things are going will help your business tremendously – and it'll also help your friendship. Remember to be receptive to feedback. If your friend tells you that something you're doing is causing the business harm, consider working on it.
Communication is Key.
It's easy to say we will communicate when a problem comes up, but that's rarely the case. Figure out how you want to communicate issues to each other. Is your friend super defensive when you mention his/her faults? Would they do better seeing it in writing, and having a chance to cool down a bit before having an actual discussion?
Would you prefer to get a phone call, have a discussion in person, or maybe get an email from your friend letting you know what's bothering him/her about how you're doing business?
It doesn't always have to be negative, either – communication is critical when you're dealing with clients and customers as well. Have a resolution plan. If you have a disagreement and neither wants to budge, have a third-party on-call to help be the “tie breaker”.
Hire an Attorney.
You didn't want to hear this one – I get it – but it's necessary. If you don't have the funding to afford an attorney, consider swapping services. I've had lots of legal paperwork completed by a paralegal in exchange for advertising for her services. Check into different law firms (especially newly established ones), and see if they're interested in a barter (or at least a partial one).
Have an Exit Strategy.
This tip is one that Tiffany talks about a lot at the SITS Girls conferences. The SITS Girls have done an uhmazing job at staying in business together, and doing everything the right way. While it's not something that anyone likes to talk about, having an exit strategy is crucial to your business – and your friendship.
An exit strategy is simply a plan that you have written down and put in place if one of you decides to leave the business. How much notice is required to exit? How will the money be handled? Does the person leaving just hand the business over? Do they take anything with them?
Do you both plan to stay forever, and then sell the business once you can both be millionaires? Billionaires? What's your end game?
Get it all in writing. Document, document, document.