We’ve all heard the story, girl meets boy (or girl, or group – hey, these are modern times), and they bond over shared business interests. One thing leads to another and before they know it they’ve become entwined in a heady business relationship. In the early days, it’s magical. They are infatuated with one another and the budding business they’ve created.
And then, gradually, the cracks start to reveal themselves. Where there was once enthusiasm and combined vision, now there is tension and recrimination. Each starts to question the commitment of the other. They realise, too late, that they have different values, needs and aspirations. What was once so precious has soured. They see no future together and make the painful decision to let go of the dream and go their separate ways.
Ok, so it’s a little melodramatic, but you get my drift. I have seen it so many times in my professional career. People setting up in business with friends, family, partners, colleagues. So excited at the idea of working with someone they love and respect. So resistant to any conversation about the practicalities, the possible friction this may cause to their relationship. And so heartbroken when bumps appear in the road that threaten either the business or the relationship.
The road less bumpy
Let’s be honest, starting and running a business is hard. No two ways about it. It takes courage, determination, a staggering amount of time and energy, and the ability to pick yourself up, dust yourself off and get back on the horse many, many, many times over.
All of which means that it makes total sense to have someone by your side who has your back. I’m not saying that you should actively avoid going into business with friends or partners. And I’m not standing in judgment on your relationship.
What I am suggesting is having a framework in place to help both of you (or all of you) better understand your business, your respective roles in your business, your expectations of one another and how you will help each other get through the inevitable rough patches. Forewarned is forearmed…
What I’ve learned
Prioritise your relationship
Establishing your working relationship framework needs to be a priority. If you leave it till later, because you’re too busy getting the business off the ground and you think it’s better to see how things go for a while, you’ll find that “later” becomes “too late”. It’s much easier to have the conversations and iron out any issues in a business that doesn’t yet exist, than in a business where you now have a vested interest and probably no spare time.
You need to decide now on your ownership structure for the business – will it be a company, a partnership or unincorporated business. Who owns what in terms of the business (whether it is shares in the company, intellectual property created by the business etc.)? Who is putting what into the business (money, skills, equipment, intellectual property)? What role will each of you have in the business (and please base this on your actual skills, not on the fact that you want to be the boss!). How will you resolve any deadlock if you can’t agree on a course of action?
Have you mapped out your vision and plan for the business? Are you comfortable that you have the same values and blueprint for how to manage, market and grow the business? Try to explore this as much as you can now, it will save huge amounts of individual time and energy if you are both driving the business with shared vision.
A key part of your business planning should be to establish how you will deal with the company’s finances. How will you decide whether money earned should go back into the business or come out of the business and into your pockets? How much financial risk are you each prepared to take on for the company (e.g. using your personal assets to back loans etc.). How long are you both prepared to wait until you see some financial return from the company? How will you decide if or when to call it quits?
Talk to one another about what motivates you, what your preferred working style is, how you deal with conflicts, what types of behaviour are guaranteed to send you doolally. Be as specific as you can be and don’t kid yourself. The truth will out and it’s best for you to know each other’s buttons so you can at least try to avoid pushing them. Remember, you are starting this business together because you see a great future in it – don’t let your own insecurities or quirks get in the way of that.
It’s easier said than done, but you need to make a pact to try to keep some perspective when things get a little snarly. Take time out from the business regularly to do friend/partner/family stuff (and ban any conversations about work). Repeat like a mantra “it’s only a business, it’s only a business” when tensions arise. Make sure that you maintain open and honest communication with one another, don’t let misunderstandings derail your goals.
Write it down
You don’t necessarily need to put all of this into a contract, but it might help, if only because it takes some of the “personal” out of the equation and makes you focus on the pure, unemotional logistics of your business relationship. If you are setting up a company then I would definitely recommend having a simple shareholders’ agreement, to make it clear who owns what, what each party can do individually and what requires mutual consent and what happens if you can’t reach a mutual decision on any matters. If you can’t afford a contract or really don’t want one, then at the very least I advise that you create as detailed a business plan as you can and that you both sign and date it, to show your agreement and commitment to following it.
I hope you’ve found this helpful. Let me know in the comments below!
Good luck – I wish you a very successful future together!