Business with ‘friends.’ Really?

I’ve managed to learn one or two things over the years, certainly one is that doing business is far better with friends: with people you trust, admire, enjoy being around, and with people who make you laugh. Agreed, there are good ways and there are bad ways of going about working with friends. Anyway, below I’ve included what I’ve learned from trial and error about diving into working relationships and partnerships with those I consider being my closest friends. Communicate. Communicate and Communicate. The importance of sincere, authentic, and frequent communication cannot be understated. Simply a no-brainer for many although even more so with friends. Sure it has its drawbacks, no one likes to be confrontational, although without clear channels of understanding, disaster lurks. I’ve learned this the hard way and now, with the regular networking groups I inhabit I’ve made it my mission to instil the “communication culture.” I do weekly 1-on-1 engagements with all my partners and teammates, and as a result we do better business because of the understanding. We are able to talk about the good and what is not so good. We talk about points of tension, highs and lows, supporting the network with ‘intelligence.’ Life beyond work, our personal goals and aspirations, loves and certainly passions…etc. It may seem excessive to some, although I’ve seen this level of communication really pay off resulting in some exceptionally strong long-term partnerships. Think about it, please ladies. The start-up entrepreneur usually begins by evenly splitting their ownership in the business between the friends they start the company with. This seems like the right way to go. But sadly, more often than not disaster strikes. For instance, say you start a business with your best mate and with equity split 50/50. What happens then, a year into the business your friend decides to take a full time job with the ‘next big thing?’ They will still own 50% of the company and because they aren’t actively working on the business, what happens to that cherished friendship? Instead, I recommend that you vest equity over a 4-year period and think about a buffer, a one-year “cooler.” This means that if any of the partners/friends left the company within those first twelve months of starting the business, they will not get any equity (i.e. this is the “cooler”). Again, if you go in 50/50 with your best friend as partner, and they’ve left 2 years into the company, they would have say just over 16% of the company instead of 50%. By planning not just for the best (which is what most friends do), but also for the potential of plans changing, you will save both your friendship and, likely, your company in the process. friends Singing the same song are we? A good friend of mine had a brilliant team behind a new start-up and everyone was motivated to make it happen. But when he sat down with his co-founders, he realised that their motivations were not quite synchronised although he overlooked this detail and decided to carry on regardless. It was only some time later that the results of this simple action became apparent when he found he was the only ‘partner’ left “holding the baby” when the wished for riches did not happen over night. Intuition is a wonderful gift and we should listen more often. Typically with friends, it’s easy to dive into a start-up opportunity or a working relationship that is exciting, fun, and could be lucrative. But if your motivations aren’t aligned, whether it’s in a few months or a few years, your partnership will inevitably fall apart. It’s just not worth it. In short, make certain you are “singing from the same hymn sheet” and if it doesn’t sound in tune, don’t work together, just continue to be good friends. Breathing space is important. Picture this… you and the partners are working upwards of 18 hours a day 7 days a week. Being best friends, roommates, and co-founders meant that we were together almost every waking minute. Although it’s a fun way to start a new business and it ensures that you are all fully in tune, my feelings (in retrospect) are that if you want to live with your friends + co-founders, do so with an exit strategy in mind (i.e. give it a set time commitment and after 6 months or 12 months, plan on living and working elsewhere). You will still likely see one another 16 hours a day… but giving yourselves just a little space, just like it is in any relationship. In reflection, I realise that what I’ve noted above makes it sound like that working with best friends may be a lot of work. In some ways, to continue the support in the face of adversity, to continue on the path of success when the road is not so smooth, it is. That said, I can’t imagine a better investment of your time and for me, I could never do what I do were it not for the friends I consider myself lucky to know as colleagues and investors in the future.

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