Staingirlz.com » business partners

Starting a Business with a Friend: Part II

admin — Tue, 28 Jul 2009 22:33:08 +0000

Talking Business with your Friend

By Staingirl Elle

You now know why you want to start a business with your friend and the pros and cons of doing business with a friend. You’ve heard the warnings, but you want what Mr. Hewlett and Mr. Packard have. You want that thriving business. And it can be yours, but keep in mind that a business partnership is similar to a marriage. You must have constant communication. You have to talk before you go into business and then you have to talk again while in business, and keep on talking. So what to talk about?

1) Share your vision, values and goals. Why does your business exist? What are your expectations for the coming year, next five years? What do you each expect to gain from this venture? If you and your friend share the mission and vision of your business, you will both be committed to your common goals. There may be the occasional disagreement regarding some of the small steps taken toward reaching your goals, but overall you will know you are in this for the long haul together. This discussion will be ongoing throughout the course of your business relationship. You will have to plan and prioritize for a week, a month, a client, etc.

2) Discuss the pros and cons of starting a business with a friend. Both you and your friend need to know what you are getting into and what the potential consequences are. In addition to the advantages and disadvantages discussed in Part One, the idiosyncrasies of your specific relationship with your friend and of your business may require further discussion.

3) Talk about the money. You may be surprised at how differently each of you view this issue. How much money will each of you put in? If one of you puts in more money than the other, is there a specific reason? Is it meant to be a loan to the company? What are the expected expenses for the first year? What happens if the business needs more money? What happens when the business begins to make money? Do you plan on plowing the money back into the business, or were you planning on distributions? What expenses will you consider business expenses? Are you planning on running your meals, cars, etc., through the business?

4) Talk about the little things. A dress code may matter, depending on the nature of your business. What are the hours of business? What are your time expectations, work habits, temperament?

5) Talk about the huge things. How will you handle the disagreements? What happens next? Will one of you have veto power? Will you each have an area in which you are expected to have absolute authority? And what if there is no surmounting the disagreement? How quickly do you want to expand? What is your philosophy in handling employees? What happens if one of you marries, divorces, dies, has a child? How do these developments affect each partner’s interests?

6) Talk about the possible end of the business relationship. If one of you dies, what happens to that person’s share? Is it a legacy for your children or does your partner get first right of refusal to purchase, and at what value? What happens if your are splitting up because you can not work together? Who gets to keep the business, or do you split it?

7) Talk to your respective attorneys. The talking points in this blog are only the beginning. Your attorney will likely have more questions particular to your needs. And each of you will want your own attorney to assist you with a written agreement. This agreement will protect your interest in the business, if not your friendship.

The second document you will want is a business plan detailing the mission, vision and goals of the company. You and your partner will want to review it from time to time to make sure you are on track, and you may adjust it if circumstances warrant.

And once you’ve gotten the talking out of the way – well, actually it should never end – enjoy the ride. May you and your friend have a fantastic voyage.

Starting a Business with a Friend: Please don’t hate me!

admin — Sun, 26 Jul 2009 17:11:48 +0000

Part I: Why have a partner and what are the pros and cons of going into business with a friend

Kaye and I consider ourselves renegade middle aged women who are fortunate to have found a creative outlet that we expect will earn us some money. We’re friends who have gone into a blogging business together. And so far it has been fun, except for one minor incident. However, when I began researching the topic all I found were dire warnings. You will lose your friend! You will lose your money! Your partner may not pull her weight! Dang! What the heck were we thinking when we went into business together? Well, we like to think we were being smart. But there is a lot to think about:

Why do you want to go into business with a partner?

If you plan on starting a business with a partner you need to figure out why. What does your potential partner bring to the table? For that matter, what do you bring to the table? There are any number of reasons to work with a partner. You have a vision which you have shared together for quite a while. You can not afford to begin the business on your own. Your partner has skill sets that complement your own skill sets. There is so much work to do that you can not do it on your own. Your potential partner has connections in the target market or to suppliers and vendors. Or maybe you just want some company in your venture.

In our case, I had an idea as to what I wanted. I knew I wanted to write a blog and I had an additional vision as to the store I want (and yes, I know there’s no store yet, but we’re just getting started). Thanks to my brother I already had a name for the business, and based on the name I had a good idea as to my logo and artwork (coming soon, too!) I figured I was a decent writer, but my computer skills are fairly limited. I turned to Kaye because she had tech skills I lacked. Finally, my day job is a sole proprietorship. I wanted a partner to keep me motivated during my off hours.

Kaye’s reaction to my suggested business was a fabulous surprise. She was more excited than I was. Not only was she on board, but at the first official meeting to plan our venture, she had drawn some artwork on the cover of her notebook that completely mirrored what I had in mind. And as she began blogging, and reviewing my work, I also discovered that she could write with a sense of humor.

Before beginning the business know the pros and cons of going into business with a friend.

a) Pros of starting a business with a friend

The most obvious pro is the expectation that you will benefit from knowing who you’re dealing with. Depending on the length of the friendship and the level of dealings, you know your friend’s strengths and weaknesses, and the strength of her character. This assumes that your friendship goes beyond mere acquaintanceship.

Again, if you know your friend well and are familiar with her other dealings, you have a greater expectation of loyalty and commitment. You will trust your friend over a stranger or acquaintance with your ideas and your finances.

b) Cons of starting a business with a friend

Sometimes you don’t know your friend as well as you think. You knew your friend as a loving friend who would do anything for you. But you didn’t know that she doesn’t know much about business, or that her work habits are poor.

Whereas you expect commitment to your shared business goals, she expects understanding of her not so great work habits because you are friends.

You may be liable for your partner’s business activities and debts rung up in the name of the business.

It is not unusual for partners to disagree. Depending on how open you and your partner are,the friendship can be a help or a hindrance. You may actually be open and frank with each other, in which case the friendship is a plus. You may have a harder time approaching a friend than an acquaintance over something that is bothering you.

And then there is the obvious: If your business relationship does not work out, you may lose a fabulous friend. Yes, the godmother of your children, your BFF, the woman who gave you her shoulder and kleenex every time a boyfriend/husband/partner done you wrong, could exit your life forever and cause awkward moments at social or family gatherings.

Enough with the dire warnings. You and your friend have some brilliant ideas that may revolutionize the world, or at least your own lives. In Part 2, I’ll blog on the important discussion you need to have with your friend. But keep in mind the following. Where would the world be if these friends hadn’t pooled their resources to pursue their dreams: the Warner brothers (OK, that’s family); Bill Gates and Paul Allen (Microsoft); Steve Jobs and Steve Wozniak (Apple); and my favorite, Ben Cohen and Jerry Greenfield (Ben and Jerry’s Homemade).

Going Into Business With a Friend: PLEASE DON’T HATE ME!

admin — Fri, 17 Jul 2009 14:24:13 +0000

How Carefully Do You Have To Tread When You Go Into Business With a Friend?

STAINGIRL ELLE: Kaye and I have known each other since our boys were in preschool over 13 years ago. We have gone through long periods of time with little or no contact and other stretches where we see each other more often. We’ve exercised together – obviously, to those who know us, not enough! We’ve done the supportive friend thing, but we’ve never been the Sex and the City type of friends who shared every facet of our lives constantly – nor did we have their Jimmy Choos.

And we’ve never been in business together. We’ve never had to face certain issues before. I want to get everything done now. Kaye wants to research and cogitate. How do we decide priorities? What happens when two people in charge have different ideas on one matter? How do you critique your friend’s work? Yea, we just faced this one – Ouch!

Now that we finally got going, Kaye was inspired. She had accomplished so much and she was anxious to blog about it. She proudly emailed me about her fantastic post. With great expectations, I excitedly clicked over to our blog to check it out. Uh-oh, it fell somewhat flat with me.

What was I going to do now? How to tell her that I wanted the post pulled for a little retooling? Was she going to feel hurt, disappointed, deflated? Worse yet, would she regret working with me?

I took the direct (and slightly bulldozerish approach), and Kaye took it like a champ. We agreed that in future anything we posted would always be looked over by a second pair of eyes.

And as far as I know she doesn’t hate me.

STAINGIRL KAYE: Not to worry, friend! In fact, I’m impressed again at how kind you are, so worried about my feelings. (Or did she just feel guilty because she thought it was really bad? LOL!) All the work everyone does in my office gets reviewed so I expect to have critiques. I feel badly that Elle fretted so much over it. But Elle is right, we need to review each other’s work. And normally, I would probably have insisted on it given my meticulous nature, but I got a little hasty in trying to get the next post out, even though I knew ideally it could benefit from Elle’s review and influence. My bad!

Now…about our different pace preferences…that could get lively.