Going into business with a friend or family members seems like the logical thing to do, you get along so why not partner up and launch a new venture?
Not so fast! Friendships and relationships don’t always translate into business compatibility. As companies increasingly laid off, furloughed, and fired employees amid the pandemic to shift resource allocation and employee headcount, Angela Civitella, a business leadership coach and founder of Intinde, says friends and family starting businesses became a growing trend. Now many of those businesses and relationships have come crashing down.
How can you avoid a similar fate? Civitella shares eleven tips to keep in mind when going into business with friends and family.
1. Set expectations early.
The key is to write down what each party expects so you can be on the same page from the beginning.
2. Create a legal agreement.
Often referred to as an Operating Agreement, this is different from the one described above, as it has to do with what each person is putting into the business with respect to investments, including money. It will also spell out what happens in the event the business is dissolved.
3. Remember, relationships come first.
Always put your relationships first, before business. Let this rule be the guiding light in how you deal with family and friends in business.
4. Relationships come first, except when business does.
If a family member who is part of your business does something wrong — such as commits fraud or steals from the business — you have to act quickly and get rid of them. If they don’t care about the business, then you shouldn’t care about keeping them around. Period.
5. Define success.
Make sure you and other stakeholders know what you are working towards and what type of success to expect. For instance: one person might define success in terms of money, while someone else might see it as feeling fulfilled or helping as many people as possible.
6. Discuss time commitments.
Everyone should know how much time and effort it will take to reach key metrics (i.e., success). Set a wide window, even if you’re sure it won’t take that long. It generally takes more work, blood, sweat and tears than most people realize.
7. Don’t be afraid to disagree.
Disagreements should never be personal. They are simply part of how a business works and should be treated as such. In fact, it can even be healthy to have opposing views work together to create solutions.
8. Become a great communicator and excellent listener.
It is critical to hear what the other person is saying, and it’s equally important to be clear when speaking to other people. Your point will only be heard when you make the other person feel they are truly being listened to, so listen attentively.
9. Create boundaries.
If you are working with family and friends, learn to separate your work life from your home life. Your relationships will be better for it, especially if you work with a spouse.
10. Consider company culture.
If you’re starting a business with family and friends, create a shared vision of company culture. With that in mind, you may have to be more exclusive when selecting your business partners than you originally intended.
11. Don’t play the blame game.
Take responsibility for your decisions and actions. You have a responsibility to make choices and live with them. Be accountable, and never point fingers. And above all, find better ways to learn from your experience.
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