Working with Friends: Part One
“A friendship founded on business is better than a business founded on friendship.” – Unknown
Friendships are one of the most precious parts of life and are to be highly valued. In business, however, this can be something entirely different and the two should never be intertwined without considerable thought, honest discussions and a common agreement on roles and expectations. Bringing friends into a business has to ultimately be about what’s best for the business… period.
The critical conversations that will likely be the difference between a successful or non-successful business relationship rarely happen says Business Advisor and Entrepreneur, Roy Murad.
“No doubt there are benefits to working with friends; the main one being the ability to work with someone you trust and who would have your best interests at heart,” says Murad. “At times it can be difficult to remember that while you also want what’s best for your friend, your primary focus really has to be on the health of your business… of you and your stakeholders.”
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Honest and Transparent Communication is Key in Business and Friendship
One of the first conversations that need to happen should centre around the role your friend would like to have in your business. Does your friend want to become a shareholder; maybe he wants to sit on the board; or perhaps she wants to be an employee? Each of these conversations will evolve differently, but knowing the preferred level of participation is key to driving any productive business relationship forward.
Let’s look at the scenario of a friend who wants to be considered a shareholder. Once you solidify the expected role, the conversation then needs to move toward the value that your friend would bring to the business, because as a shareholder they will have to invest equally to benefit at this level.
To understand the investment required, you have to take into account the value of the overall business as it stands today. This includes all financial holdings and assets, as well as the value of the brand, clients, knowledge and experience. Those intangible value-add items are often left off the spreadsheet, but are probably the most critical piece of the financial picture.
Conversations about money often become the point where many friendships are sacrificed in business. Ultimately, regardless of the type of involvement the friend wants to have in your company, the discussion will turn toward the bottom line and those conversations have to be treated with respect and honesty.
While there are many pitfalls when it comes to working with someone you know and trust, there are those that have succeeded in successfully mixing business with friendship. Think of Ben & Jerry, Bill Gates and Paul Allen, Bill Hewlett and Dave Packard, and William Procter and James Gamble, to name a few.
Just remember that the boundaries of your new relationship will be tested beyond what you may imagine, but adhering to a policy of open dialogue may just see you through the challenges. Talk now and talk often.
In part two of the Working with Friends series, we will look at the changing dynamics that will ultimately take place in both the professional and personal relationship.
Roy Murad is a father, husband, business advisor, investor, advocate for new business ventures, and consummate entrepreneur. Over the course of 35 years building businesses, guiding companies and identifying strong investment opportunities, while nurturing a thriving family, Roy Murad has amassed a wealth of experience; experience, that may be of value to others who are looking to shape a balanced and successful life experience.
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