How to weigh the risks?
To assess whether to do business with friends, work with them. Hire them as contractors or executors, involve them in a small project. If you have already worked together and know their weaknesses and strengths in the case, this checkpoint can be omitted, but you need to consider objectively how your friends have proven to be during your work together. Look at them through the eyes of your supervisor, not through the eyes of a friend: would you trust them to do the job?
Talking about slippery topics can also help weigh the risks. To work together effectively, it is important to be able to negotiate, and on unpleasant issues. Discuss with friends the likelihood of financial conflicts, how they will be resolved, how they will be handled, how they will be subordinated at work, how responsibilities will be assigned and what the penalties will be for violating them.
Think about whether to start a business with a friend if he leaves the discussion of unpleasant topics? Refusing to discuss possible conflicts and mutual obligations, citing the fact that "we are friends" - a bad sign.
How to do business with friends so that everyone is at work?
If you do decide to do business together, I can give you a few tips on how to do business with a friend so as not to regret it. My advice is the result of my own mistakes and experience. Now we have a very successful business with our friends, but in order for it to appear, we had to take into account the unpleasant truth:
- If there are even the slightest doubts in a person, do not divide the rights and obligations in business in half. Involve a friend to test him in the case, but a large proportion of the invested funds and rights should remain with you. This will help in the most unfavorable scenario to take a person out of business with minimal losses.
- Develop an exit plan in advance. Discuss and fix his exit strategy with a friend in advance, write it in a memorandum. If a person refuses to discuss this issue, it is better not to cooperate at all. Over time, priorities and life circumstances may change, and this should not ruin your business.
- Develop a mechanism for decision-making and profit sharing in advance. This will save you from future conflicts. Believe me, they will arise. People even quarrel with spouses, children and parents over finances. Make a financial model for the next 2-3 years. Calculate the financial risks, and also identify the line at which all participants will have to admit that the project has collapsed, and it is time to close it.
- Discuss the possibility of engaging third parties, be they relatives or outsiders. Agree in advance whether relatives, for example, can be involved. In the future, the partner may ask for a wife, son or army friend who he or she has met accidentally at a bar to be hired by a young firm, and this may be a problem. There is no one right solution: an army comrade can be an excellent specialist, but often the involvement of a large number of bored relatives in the business does not lead to anything good.