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January 27, 2010 10:07 AM   Subscribe

Turning a close friendship into a business partnership: is it doomed? Are there success stories out there? What can I do to ensure this works?

I am considering starting a business with my best friend of 18 years. The two of us have a mutual interest/talent that we think would make for a successful business. We get along extremely well, have great communication, and have never had any serious disagreements. We have similar values and family/educational backgrounds. There is nothing about our relationship that would lead me to think we can't work well together.

HOWEVER...I constantly hear horror stories about how going into business with a friend ruins the friendship. Is this REALLY the case? I would like to hear some success stories; I'd like to know how you avoided the pitfalls that seem to be so common in these types of situations. For those who had the unfortunate opposite experience, I'd like to learn from your experience. In retrospect, what would you have done differently?
posted by yawper to Human Relations (18 answers total) 4 users marked this as a favorite
 
I have a friend who has been in various businesses with his close friend since they were in high school (about 25 years ago). The most recent business has been going since 1996 - his friend is the owner and CEO, he is the COO and everything else - and has been growing and successful.

I can't say how it worked, but I suppose it always depends on the personalities of those involved and how good they are at communicating in tough situations.
posted by matildaben at 10:13 AM on January 27, 2010


It really depends on the personalities of the people involved.

There are some friends with whom I would do business, others with whom I would consider the prospect, and yet others who I would never do business with in any shape or form.

The friends with whom I would not do business aren't necessarily dishonest or incompetent people but friends who have personalities that I would find frustrating to deal with daily in a business context.

Where do you live? I imagine there are lawyers who have experience writing partnership agreements for close friends who can relate to you some of the potential pitfalls that other clients of theirs have encountered.
posted by dfriedman at 10:16 AM on January 27, 2010


Make sure you do everything the same way you would do it if you weren't friends. If your positions would normally have job descriptions, a list of accepted and not accepted behaviors, acceptable time off, hours worked each week, etc., than make sure you have that all in writing. Some people have great luck working with friends, but if it turns out that one of you starts to feel like the other person is not pulling their own weight, things can go downhill very quickly.

Everything should be in writing. Don't ever make assumptions about how things should be done. I would also suggest having a regular audit of some kind done by an independent party if you are not hiring an accountant.

I know some friends who went into business with someone who was a close friend, and they are now in a lot of debt because things went sour. Had they approached things as if they were working with a complete stranger, they would have never ended up where they are now.
posted by markblasco at 10:20 AM on January 27, 2010 [1 favorite]


My mother began working with her sister, and they no longer speak. Then, she started a small business with one of her closest friends, and they are now frosty acquaintances. My mother isn't particularly dramatic or easily agitated, but I think she had difficulty separating "business" from "personal." For example, her (ex) friend is lovely but extraordinarily disorganized, and my mother ended up doing a large proportion of the "unfun" work. She felt her friend didn't care enough about their business, and by proxy their friendship, and it deeply hurt her.

On the other hand, two of my cousins opened a restaurant which failed after about a year and cost them tens of thousands of dollars, and they are still as close as before.

Make sure you agree, before you begin, on the situations in which you would call it quits (i.e. if you fail to make a profit or if you actively lose money?) and how you would dissolve the business, and on what steps you will take if the business does well: expansion, rolling around in a pile of your newly earned money, etc.
posted by sallybrown at 10:21 AM on January 27, 2010


I joined a business venture owned and operated by an ex-boyfriend, and I joined it only one month after he'd dumped me. This was eight years ago, and I've been there ever since and interpersonally it's been wildly successful. If that scenario is workable, anything is.

That said, I think a lot of the interpersonal success can be chalked up to the fact that he and I have always had this freakishly good rapport, and our brains work in frightfully similar ways. (THREE TIMES now we've had to abandon games of "rock-paper-scissors" because we always have draws in every single throw.) The communication between us is incredibly good, especially when it comes to "talking shop", and when we've had disagreements we've nearly always remained very calm and businesslike. I think we've only had three heated arguments in the past eight years, and they were the kind of things where you're both in a rotten mood and you snark at each other a lot for a few seconds and stalk off in a snit, but then two minutes later you both come back and sheepishly say, "Sorry, I'm an asshole." (One time things did still seem tense, so I took him aside for another, "Okay, can we talk more about what happened back there?" and had a calm discussion, and it was cool.)

Keeping the disagreements calm helps to emphasize that "this is about the business entity itself, and it is not a value judgement about you-my-friend-as-a-person." that can be the biggest pitfall I'd see -- letting the way each of you feel about the business itself bleed into how you feel about each other; those can be two very different things.
posted by EmpressCallipygos at 10:23 AM on January 27, 2010 [1 favorite]


From someone that considers my family to be amongst my best friends, and works in a family business, this sort of situation can work, but there is always a cost.

We remain close and supportive of each other, but we aren't as close as we could be because at times we need distance due to the pressures of the business. We all share the same major values and ethics, so we all feel good about working with each other. Each person is fairly compensated and no one feels taken advantage of - but we all pitch in to take care of grunt work if necessary, and we have been through a LOT in the last 20 years, including frivolous lawsuits from unscrupulous vendors and government intervention. Things you never think about when starting a business, but those stressful events really test the merit of your relationships.

I think the single biggest issue is money. It can really change people and add dimensions to the relationship that weren't there before. Too little money as well as a boatload can bring out the best and worst in people.

I would get EVERYTHING nailed down from a legal and business standpoint before moving forward. I would also take time to nurture the friendship after the business starts. It is a wonderful experience, but you need to be smart about it and protect yourself. Especially if you have any capital tied up in the business or a family to support.
posted by inquisitrix at 10:30 AM on January 27, 2010


My business partner and i were friends first, and have become much closer friends since going into business together (she was recently my bridesmaid at my wedding). I think the key thing to remember is that to make it successful, you have to work at it, just like a good marriage. Here are some of the things that we do:

* We have "state of the relationship" talks about twice a year where we air any problems, confess things that we're worried about, and generally just make sure that both of us are feeling comfortable and not holding any resentment or concerns.

* When we disagree, we talk it out until there is a resolution, and don't let it brew. We are also incredibly candid, and don't mince words for the sake of each other's feelings. Both of us know that we're not saying uncomfortable things to be mean, though - we're just trying to improve our business.

* We always apologise when we say something snappy to each other (in fact, I owe her an e-mail today!)

* We stay in constant communication about finances, and any plans or expectations for them. It sounds like common sense, but it's easy to forget to talk about it for a long while, and i've found that the more you discuss finances with your partner (business or romantic), the more comfortable everyone is.

My biz partner and i take turns in looking after each other - when one is having a difficult time, the other will step up, and then vice versa. We don't resent or worry about this, as both of us have the type of personality that likes to be needed and useful.

To me, it really is like a marriage - you have to know going in that it won't always be roses and sunshine, but you have to have enough trust in the other person that even when it all goes to shit, they will still be on your side, and you'll still be on theirs.
posted by ukdanae at 10:41 AM on January 27, 2010 [1 favorite]


You need rules.

(1) Family cannot be involved. All discussions are between the two of you. You can't negotiate with 3 people. If someone has a problem with family, it gets fully solved before bringing it to the other partner

(2) Written agreement
posted by Ironmouth at 10:44 AM on January 27, 2010


I'd be more worried about that fact that you've never had a serious disagreement. You'll be having lost of different opinions on lots of different facets, and it's essential to know if his argumentation style is compatible with yours.
posted by fermezporte at 10:54 AM on January 27, 2010 [1 favorite]


I would also take time to nurture the friendship after the business starts.

Seconding this, actually. Once or twice early on I was a little annoyed that my friend never really wanted to...hang out, despite my inviting him (and we'd had one of those "we're going to break up but stay friends" breakups), but I tried to chalk a lot of that up to "oh, I'm just being a clingy ex about it" -- but then one time I needed personal advice and blurted out something like "can you NOT talk shop for a second, and be a friend?" And he blinked a little and apologized, he hadn't realized that he'd been focusing on that so much with me.

The majority of the time we spend in each others' company is still related to the business, but we also now approach each other with "hey, come join us at this bar" or "hey, I just need advice about something" kinds of friends things. It also helps to underscore the whole "the business side of things is separate from the personal side" thing.
posted by EmpressCallipygos at 11:00 AM on January 27, 2010


Family cannot be involved

Agreed. Last year, husband and I put collaborated on a business project with a friend. Way down the line, his wife wanted to be involved too, even though we had absolutely no need for her, and there were too many cooks already.... It was bad. Really bad. The fallout still burns.
posted by changeling at 11:07 AM on January 27, 2010


Something else that others have implied, but I think could be stated more directly.

You need defined roles and everyone involved needs to operate inside their assigned role.

That is, don't go into it without first dividing the work statement into clear tasks, figure out what roles/job-positions that are required to complete those tasks, then select the job-positions you each want to do.

THEN, once you both have your job positions selected, you just do your job as it was defined.

This way, when there's any questions, you don't have to worry about who said what or who did what, you simply take a look at the job that needs done, who was assigned to do it, and how to resolve the issue at hand. (and regularly get together to make sure the work-statement, positions, and overall direction of your company are still making sense)

And yea, since there are only two of you and probably dozens of jobs that need done, you will be wearing a ton of different hats.

Good Luck
posted by johnstein at 12:19 PM on January 27, 2010


Argh. There are no hard and fast rules about either friends or family. Business relationships are business marriages, and they work out about as often as marriages do - so, about 50% of the time.

My mother and father owned a publishing company together and the business part was fine - it was not the reason their marriage broke down. My mother and stepfather then lived and worked together at a NYC agency for years before leaving to start their own agency. 25 years later they are still together and the agency is still intact and still successful.

In my own career, I work with a very close friend of 12 years in a business relationship that works very well. I also work with my husband doing related things in an unrelated field, and that works very well, too.

I think there are four keys, and having written them out I think they also apply to marriage:

1) You must genuinely value the skills and smarts the other party is bringing to the table
2) You each need to value the other person so highly that anything other than a 50/50 split would offend you on your partner's behalf.
3) You need to have clearly demarcated spheres of responsibility and empowerment and trust each other to do a good job within them
4) No party can be a drama queen. As with marriage, you do not want to be in bed with someone who is going to hang the whole relationship out over the water every time there's a dispute about what colour the couch should be or what colour the product packaging should be.

With the publishing company, my mother edited and published the books and my father provided all the working capital and drank the profits, so that worked out OK. With the agency, my mother chooses the clients and makes all the submission decisions and my step-father does all the legals. With my partner, I do product design and 90% of the client work and she codes and makes UI flow and feature list decisions. With my husband, I do the business development stuff and he does absolutely everything else, which is most everything.

In all of these relationships, all of the money is shared. In all of these relationships, we all know what we're in charge of and not in charge of. And critically, in all of these relationships we all know we'd have no business(es) without the other party.

So, honestly, if it's always a mistake to start a business partnership with friends or family, my family is doomed, my marriage is doomed and my oldest friendship is doomed too. After doing this or seeing it done for 25, 12 and 5 years respectively, that feels unlikely at this juncture.
posted by DarlingBri at 12:22 PM on January 27, 2010 [2 favorites]


My general rule now is to never ever work with a friend unless;

A) They have a skillset I cannot reasonably obtain by hiring someone else. Working with them is an opportunity I could never replicate by putting an ad on CL or doing some other kind of search.

B) I have complete trust in their professionalism and work ethic. That is, I trust them to approach it as a "job," not "hanging out with friends."

I find very very few people who can live up to these, especially "B." I've had so many bad experiences asking my friends to help me on movie sets that I just don't do it anymore. Yelling at your friends when they goof off is no fun for anyone. I now prefer to hire someone, and invite my friends to just come and hang out, as friends.

(Partnership is a little different than supervising friends but I think the same basics apply- because if he takes it even slightly less seriously than you, you will end up, in effect, bossing him, and it won't be fun.)
posted by drjimmy11 at 1:38 PM on January 27, 2010


I went into business with my best friend. After about a year and a half I was ready to move on so we agreed that he would buy out my equity in the company and he would continue on to do whatever he wanted to. In the year that followed we saw each other only three times and spoke maybe eight or 10 times. It sucked, a lot. Felt like a breakup, in fact. We're friends again now, but nowhere as close as we were. I would be extremely hesitant to go into business with him or any other friend, not because I don't trust him to be good, but because the personal risk is unacceptable to me. YMMV.
posted by ben242 at 4:18 PM on January 27, 2010


My best friend of 11 years and I quit our jobs (at the same company) to open our own business. We had worked with each other in various capacities for the full 11 years and thought we were the perfect people to go into business with each other. We ended up closing our business in less than a year.

While we had successfully worked side by side in our previous work life, there is a whole different dynamic at work when you are dependent on each other for your livelihood. We were good communicators going into it, but that seemed to fall apart once we got underway. The work styles that we thought were so similar ended up being on opposite ends of the spectrum. We drove each other crazy and fought constantly when we had never argued in our 11 year friendship. It was a disaster. Our very close relationship suffered quite a bit and over the last 3 years, there have been many moments when I thought we wouldn't make it - that it was too damaged.

Slowly we are rebuilding, but there are still resentments there. Our friendship is not what it used to be. I would never go into business with a friend again. If you have it in you to be an entrepreneur, my suggestion is to go it alone.
posted by cecic at 6:04 PM on January 27, 2010


You'll never know if it will work or not without going in, but if you go into it, make sure you go into it with a well-planned, written-down, perhaps-even-lawyered exit strategy. If you want to split up, the process should be known ahead of time.

This isn't just about your friendship - an exit strategy covers any of the good or bad things that happen in life that may preclude continuing the business together: becoming a stay-at-home parent, wanting to go back to school, etc.
posted by whatzit at 7:26 PM on January 27, 2010


Thank you all for your insights. Only marked a few as best but they were all very helpful. You've given me a lot to think about.

Cecic...your story scares me...it sounds too much like my situation :(
posted by yawper at 6:37 AM on January 28, 2010


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