ENTREPRENEURSHIP / DEC. 14, 2014
version 2, draft 2

How to Build a Business From Friendship

We are always told not to mix business with friendship. Reason being that one party might take advantage and consequently incur losses for the other. I do not oppose that thought and in fact, I’ve been a victim of that situation as well. However, I’ve also come to learn through experience that there are indeed businesses that blossom from friendship. So long as certain discernment measures are put in place to ensure smooth running of the business. These include:

Mutual Respect

The involved parties should ensure that they respect each other irrespective of the situation at hand. For instance, we all know of friends that can be quite disrespectful when disharmony erupts. Similarly, there are friends that can decide to take advantage of happy moments by exploiting the business and expecting the anomaly to be overlooked. Speaking of which...

Mutual Trust and Honesty

You should ensure that the involved parties are not involved in any dubious schemes. Everyone should ensure that they’ve disclosed their true motives for the business in an honest and trustworthy manner. Same case applies to the running of the business and sharing of its profits .

Mutual Integrity

There should also be a threshold when it comes to upholding integrity in friendship as well as in business. You cannot afford to do business with a friend that resorts to dirty antics when disputes arise. The running of the business itself requires a lot of integrity since small and petty offences might be kept under the radar and go unnoticed. This brings us to...

Mutual Goals and Interests

Disputes usually arise due to differences in goals and interests. You must ensure that all involved parties share the same vision in the growth and future of the business. Otherwise, you might have to undergo the costly inconvenience of splitting the business when it is at its peak.

Mutual Guilty Conscience

Besides having mutual integrity and respect, you should also ensure that the involved parties are good at honouring agreements. That everything doesn’t have to be ENFORCED for the business to run smoothly. There should be a mutual sense of guilty conscience particularly when it comes to fulfilling individual responsibilities within the business. That way, everyone will be an enforcer as well as a follower of business rules and regulations. In any case, everyone’s an adult so there’s no need for anyone to be pushed like a kid.

How then does one build a business from Friendship?

#1 Do a thorough Background check on each other

For everyone’s sake, a background check should be done on every individual to avoid rude surprises. If someone was an ex-con, let it be disclosed and the issue settled. If another was involved in embezzling of funds, then they should be kept off the financial affairs of the business at all costs. It is highly likely that everyone has some dirty linen in the closet. That’s why it’s important to disclose any relevant secrets that might prove to be detrimental in future if they end up disclosed.

#2 Disclose available resources that every individual is willing to contribute

This fact sounds easy, but it will ultimately prove to be a key factor in the long run. To begin with, the profit ratio will be determined by this. Moreover, the power share within the business will be determined by the stake that every individual holds. Plus of course, there’s the issue of a potential break-up and how the business assets should be divided. And that is just the tip of the iceberg. Many issues in the business will ultimately be settled by the individual stake that everyone has within the business. All the same, to avoid any unnecessary power struggles, it would be wise to...

#3 Operate a revolving door policy in Leadership and Management of the Business

In as much as everyone has a different stake within the company, it would be wise to give everyone a fair chance in running the business. In any case, the person with the least share capital can actually prove to be the best manager. Another can prove to have great accounting skills and so on. That way, there will be a unified sense of purpose in running the business. So much so that no one wants it to fail. Everyone will then give their very best effort irrespective of their monetary contribution towards the business. Plus of course, the business will have saved on plenty of labour costs so it will be a win-win situation whichever way you look at it...

In a world riddled with lots of ego, deceit and selfish ambitions, it’s quite hard to find a good friend. Moreover, you’ll find that most people today have been through untold betrayals simply because they naively trusted a friend in business. As an anonymous tip once put it, "Great friends are hard to find, difficult to leave and impossible to forget."

Image Credit: Huffington Post

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