Considering a Friend or Family Member for a Business Partner? Here are Some Tips
We love our family and friends, but when it comes to running a business, the stress of the situation has the potential to throw a serious monkey wrench into important relationships. If you are sure that you want to go into business with someone who is close to you, making sure that you take pains to minimize the risk and mitigate the potential for disputes down the road is of the essence, lest you find yourself short of both a business and your business partner. The good thing about having someone you are close with on your team is that you already have a strong rapport, trust each other and share passion that can be explosive behind the right idea. Whether your intention is to turn your business into a family business that can last for generations, or to turn a longtime dream you’ve shared with a friend into a reality, make sure that you cover yourselves against every chance of conflict. While you will inevitably have ups and downs, protecting yourself and your friend or relation before hand is the strongest move you can make.
Make sure you have the proper legal documents in place. A business partnership agreement should never be only verbal, nor should it be drawn up between partners without the help of an attorney. The reason why you must create a legal agreement is to erase any doubt regarding a worst case scenario, which could quickly escalate into an irrational conflict, with no clear resolution and no obvious mediator. Know who is paying for what, what each person will be making, the share of the business that will be owned by both parties and what entitlements do they gain from their stake in the business.
Make firm agreements on the division of responsibilities for running the business. Who will be managing what, and more importantly, are they qualified to manage it? Be honest with each other before money is on the table, since once it becomes involved the stakes of success and failure are greatly elevated. You and your partner should both have a clear idea of your job descriptions and be willing to share work in a way that makes sense. While in a small business people will more often than not wind up wearing many hats anyway, you should still have a plan in place for splitting the work along lines that you’ve agreed to.
Keep your normal relationship strong. When you go into business with someone, they don’t stop being your friend or relative. If anything, the personal relationship you share with them becomes more important and deserves to not be crowded out by your business relationship. Make time away from your responsibilities where you can be together in a relaxed context without bringing up your other responsibilities. By keeping your rapport strong, you are making sure you retain it as a special advantage instead of letting it turn into a point of further contention.
Photo Credit to Nnamdi Nwaokocha on Flickr