When it comes to doing business with friends and relatives, blood is not always thicker than water. Despite the best of intentions and the biggest hopes, what starts out as a seemingly “strong”, mutually-beneficial business transaction or partnership can turn into anything from a minor personal embarrassment to a major business nightmare. Having any form of business transaction on the basis of friendship like buying, selling and doing deals with pals and kinfolk in most cases turn bitter. Have you had or heard of terminated friendships
Most people jump into a business partnership with friend’s way too fast and end up getting hurt either financially or emotionally. That’s usually because they did not recognise the sensitivity of doing business with friends and therefore, did not take certain important business factors into consideration.
Despite the risk, successfully partnering a business with a friend may have its own advantages but only if a solid line can be drawn between friendship and business. Sri Lankans are weak at this though – some people can really stretch the limits of friendship but most cant.
Occasionally, crossing that fine line between favours and taking advantage of someone happens even without you knowing. To preserve those life-long friendships, it’s important to establish ground rules and gain a mutual understanding of how things are supposed to operate. Favours and “unplanned” friends and family discounts hurt small businesses.
The stronger the relationship doesn’t mean the lower the cost. And just because you may have helped them in the past doesn’t mean you are entitled to anything. If you are not going to pay full price, the difference will have to come from somewhere else. And it’s most likely your friend’s pockets. The most dangerous thing about mixing the two is that the entire dynamic of your relationship will become quite visible. Any flaws, insecurities or ambiguity between you two will either worsen or deteriorate once money is involved. So always be careful and choose wisely who you go down that road with.
Start on a clean slate
Squash any previous personal issues, past misunderstandings and unresolved disputes no matter how ugly they may be. Discussions between the two parties get pretty heated and I can guarantee you that any unresolved feelings will spill out eventually. Creating a completely off-topic argument about something irrelevant. You want to make it work for the long term – create an open dialogue where you both feel comfortable expressing yourselves to one another. And be sure to maintain that dynamic throughout the relationship.
Keep personal and professional relationships separate. Make sure you maintain a balance between your personal and professional relationships. Don’t let disagreements in business spill over into your personal life, and vice versa – easier said than done though. So be aware
Arms-length business principle is the only way to succeed in business in a sustainable manner. When you remove the “arms-length” and start doing business with people who are close to you, you often start down a course that’s hard to change or reverse. Whether it’s setting, or creating problematic assumptions, changing or getting out of friends or family dealings is much harder than business-as-usual.
We all like to think that grownups can keep clear heads about these things, but again, human nature is such that it’s always easy to be calm and philosophical going in, much harder coming out. If you decide to play matchmaker, make sure it’s very clear to all parties that you are simply making an introduction, the rest is completely up to them.
Of course it would be great if doing business with those closest to us was a risk-free, rewarding pleasure. Certainly sometimes it works out fine, but oftentimes it doesn’t. As with many things in business, it is helpful to try to anticipate the worst-case scenario – a mildly ticked-off acquaintance, personal embarrassment, a relative who never talks to you again, and consider the reasoning, benefits and alternatives.
Decide if it’s a risk worth taking, and if you can live with the possible consequences. Make sure you have open and honest communication with your friends before going into business together. Discuss your expectations, goals, and concerns to ensure everyone is on the same page.
Create a formal agreement. Even if you are working with friends, it’s important to create a formal agreement outlining each person’s responsibilities, ownership stake, conditions around transactions and how decisions will be made. Be prepared for challenges: Running a business with friends can be challenging, so it’s important to be prepared for disagreements and conflicts. Have a plan in place for how you will address these issues when they arise.
As your business grows and changes, it’s important to consider how your obligations and responsibilities may evolve. Be open to making adjustments to ensure the business continues to thrive for the mutual benefit.
Help your relatives and friends as a good human being but think twice and be intelligently driven when taking such decisions not to lose relatives and friends doing business with them or offering employment.
