Doing business with friends

One of the quickest way to turn friends into enemies is to go into business with them as friends, that is informally and on trust. When the business succeeds there will be arguements over people's roles, and arguements about who contributed what, and worst of all greed may rear its ugly head, causing argurements about who is owed what. Prowling Dog has seen this happen on more than one occasion.

You can still go into business with friends. The advantages are that you know each other and often have tallents that complement each other. The trick to staying friends is to approach the business relationship as if you were total strangers.

Get a business lawyer to assist you from the outset. Produce proper contracts and a business plan that defines each person's role and contribution. Write down who will be a director, a manager, in charge of sales, in charge of accounts and so on. Document each person's contribution - financial, goods provided, work contributed, bringing in contacts and clients, time spent on the business. Document the financial side of the business. Work out and put in writing how each person will be renumerated, in money, services and goods. Work out and put in writing how profits will be re-invested and distributed - how much (as a percentage) and how often.

Work out a strategy if the business struggles financially.

Finally, document exit strategies. What happens if one partner wants to leave the business? What if the business is sold? What if the business is wound up?

Once again, make sure everything is in writing properly and formerly as if you were dealing with enemies, because if you do not, your friends will soon become your enemies. If you follow this advice, you will most likely succeed and prevent arguements.

©2014 Prowling Dog