While starting business with your friends has its own perks of joys and happiness, it could rapidly turn into fights and tears over the nitty gritty legal details that you two missed out on initially. Here’s the 10 things that could definitely go wrong or right while joining shares with your best friend:
Your closest friends are people you trust the most and love to be around. Friends don’t have to worry about tiptoeing around issues or saying hard things straight to your face. But letting the right thing out and understood by your friend becomes tough when it comes to the stakes. We all have heard horror stories about best girlfriends starting a business together with high hopes and seen the business downfall exponentially because of issues under the rug. This is where speaking becomes misunderstood, and disagreements become scrappy. While starting business with your friends has its own perks of joys and happiness, it could rapidly turn into fights and tears over the nitty gritty legal details that you two missed out on initially. Here’s the 10 things that could definitely go wrong or right while joining shares with your best friend:
First you need a strong foundation in partnership agreements to manage your newly started relationship. Pro tip: Establish ground rules and have them written with the assistance of Miss Legal before diving into the deep ocean.
Pros and cons of starting a business partnership:
1. You trust each other: Having known these girls for years or maybe decades your instinct tells you can trust them without having a contract law in place. Evidently, even if you trust your friend fully, you both would be drafting clear ground rules in case your company suffers a loss or losses. So no matter what the agendas, you both would want this business relationship to succeed and your company to prosper. So our Miss Legalizing suggest you write down a business contract agreement before you start your newly complicated relationship.
2. Forms of business: Friends tend to think alike, which can be a great thing if you have to pitch an idea to a company or board of directors of your own company or setting big milestone goals for your company. But, it could all go down if you and your friend get divided on a specific milestone. While your friend is great at building teams and taking your business the higher up notch, she comes at a null stop when she decides this is the level of success that she would be happy to live in comfortably for the rest of her life. Whereas you would want to take your business to greater heights with more partnerships and stakeholders joining hands to work with you. Endorsing unmotivated or lazy friends to your company’s bigger purpose would easily trigger each other’s tempers. That is where Miss Legal is here to offer you assistance in drafting and managing solutions to your business problems.
3. Who’s-really-the-boss syndrome: Things become pretty tough to talk down if money comes in the way. Unless roles are clearly written down in the business agreements and contracts, a 60/40 relationship or even a 50/50 relationship could trigger power struggles, affecting every aspect of your relationship from operations, ideas pitching, company’s mission, vision and strategy.
4. You know the same people: Working with your friends might have an advantage in the early days of your business when you both need new connections. But things could get murkier if one of you get on the bad side with the networking people or worse still, if one of you cares more about building contacts through this business than building business through these contacts. Whatever the reasons behind the debacle, it could negatively affect your business irrevocably.
5. You don’t share the same goals: It would be a catastrophe if you wanted to build a lifestyle that would take decades to take your business to that multinational heights whereas your friend wants to invest her energy, time and effort in creating a high-profile business that would make her $10,000 a month within a year or two. The difference in both visions could result in bad conflicts.
6. You skill sets complement each other: While it seems all fun and games when you and your friend decide to do business together because you could also spend more time together this way and just because you get each other. But Miss Legal suggests you make sure that your skill sets truly complement each other’s to make role taking easier and productive.
7. Stable your personal lives: Our top professionals from their vast experience of dealing with clients all over the world have a tip from Miss Legalizing cases: Make sure that you and your friends personal lives do not contradict each others. You would not want to work with someone if you want to enjoy your freedom and work from anywhere around the world while your friend wants to make it a 9-6 self-appointed job in a designated office space. While office space is not a bad thing, but make sure to understand each other’s freedom before binding in a business
8. Power struggles: Be sure that you both can handle constructive criticism and questions asked if the other person has a bigger role than you and vice versa. Power struggles in business could really screw up those relationships and connections too fast. While it be your resort to hire a business litigation attorney, Miss Legal wants to empower you to sit down and know and write your business law contract at the beginning of your new relationship to avoid trouble in your new journey.
9. Professionalism vs friendship: You don’t need to keep a poker face with your friend while you’re at work. We suggest that you hold on to your strong bond of friendship to bridge an even higher form of professionalism. You can do this by:
10. Getting everything written in business contracts: Once you know and agree upon a mutual goal for your company, you know what is at stakes and you can set clear house goals or articulate them to your Miss Legal as mediator to write in the legal business contract what is required of each stakeholder. You must absolutely have a written agreement in place that should include company’s vision, roles, ownership breakdown, conflict resolution terms, investment percentages and amounts, compensation amounts, succession plans and power of attorney.
Always communicate to your business partner or if it’s already too late with your Miss Legal mediator what strategic results you want to achieve to make your business a success. Before starting a business with your friend or putting all your eggs in one basket make sure to think of all the above points and consequences that could result due to the complexities involved in the business partnerships. You definitely need a road map and written contract by law to secure your business and relationship with your friend.
Remember, we have seen one of the most powerful businesses start with friends. But we have also seen many of those failed miserably leaving broken friendships and cold grudges at the end. Ponder hard before starting a business with your friend. Request assistance or mentorship from Miss Legalizers if you need help.