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Starting a business partnership with a friend
by Startacus Admin
Going into a business partnership with a friend may seem like a dream situation. However, there are many considerations to be made before making this kind of commitment. Making a poor decision could lead to not only an unsuccessful business venture, but the end of a friendship.
Microsoft research shows that around half of all partners in new business start-ups are friends before the partnership begins, so clearly this is a highly popular strategy. What are the dangers that face this type of partnership, and how do they make things work?
Making it work Entering a business partnership is completely different to a friendship, and it is important that you treat the two relationships differently. Disputes and differences of opinion may be rare with a friend, but these scenarios are more likely to emerge in a business environment. How you react to these disputes will define how your partnership works, and if the transition from friendship is likely to be a successful one.
Rather than avoiding each other after your first business dispute, sit down and discuss the issue until you come to a conclusion which is satisfactory to all the parties involved. Once you have resolved this initial disagreement, any future conflicts should become easy to deal with and less likely to damage the business.
Partnership agreements A partnership agreement is an essential element of a successful partnership, ensuring that many of the most damaging issues which can face a business are dealt with before they become a problem. These agreements determine such important points as the main responsibilities of each partner, and what they are expected to put in to the partnership.
If money is put in to the business during the start-up phase, a partnership agreement can provide guidance on what percentage of profits a partner will receive. For example, if partners contribute different amounts of capital when setting up the business, the partnership agreement could state that profits will be divided to reflect this.
Remember to stay friends Going into business with a friend should not be the end of your friendship. Many unsuccessful business partnerships have failed as a result of ignoring the reason they went into business together in the first place: their friendship. Take the time to do things together just as friends, instead of constantly discussing work when you are together. As well as maintaining your friendship with your partner, this can also help you to unwind from the pressures of running your own business.
Don't be afraid to seek partnership advice
Just because the partnership began with two people does not mean it has to stay that way. Guidance on any aspect of a partnership is available from experienced advisors, while it is highly recommended that you bring in a lawyer or solicitor immediately, avoiding panic when you first have the need for legal advice.
Never forget that working with a friend towards a shared dream is an exciting time, and do your best to see beyond the problems that will come your way. A successful business partnership with a close friend is one of the most rewarding experiences you can have, an outcome which is more than worth fighting for.