Going into business with friends or family will have many ups and downs, and each partner needs to be prepared for these. The worst thing you can do is to rush into these partnerships without thinking them through carefully.
If you’re considering starting a new business arrangement with a friend or family member, consider everything you know about this person, then ask yourself these questions:
- Would you consider buying from this person or doing business with her if she were NOT a family member of friend?
- Do you share the same values – being on time, honesty, work ethics, attitudes towards money – with this person?
- If she is already in business on her own, do you like the way she conducts her business or does something bother you?
- Do you consider this person to be business savvy?
- How much will this person be able to contribute to the business?
If you have any doubts in your mind after answering the questions above, you should seriously reconsider going into business with this person, no matter how close you are.
Here are five useful tips to consider before venturing into business with someone you know:
- Discuss the finances well ahead of time. One of the biggest problems that arise from doing business together is that of money. Ensure that you enter the partnership on as equal a footing as possible. If one person cannot bring in 50% of the finance, they must be able to bring in something just as valuable to the business.
- You must be able to communicate with your business partner constantly. Never leave anything unsaid. If you have doubts, air them from the beginning and try and resolve them before you venture into the business
- Always be blunt about what you want, like or dislike. Do not assume that, because you know one another, the other person will know what you want.
- Have regular meetings and try and be as formal and structured as possible with your business. Make sure these meetings address issues and correct them as soon as they arise. Do not mix too much pleasure with business if you can avoid it.
- Set out in writing and get a contract drawn up before the start of the business – yes, even with friends and family. Be clear and specific about projects, deadlines, financial commitments and obligations, structure, responsibilities, and what happens in the event that the business does not work out as planned. This may eventually be what could save your relationship if the business fails.
In general, it is advisable to be extremely cautious when going into business with a spouse, family member or friend. If in doubt, it is best to stay away from it and to choose your relationship over the business. You can choose from many potential business partners who are not also friends or family members, but who share your values, goals and ideas.
source: Flair West Africa
photo credit: google