Friday, October 10, 2008

Being an Entrepreneur with Friends

Every month I look forward to Norm Brodsky's articles in Inc. magazine.  His NYC candor and first-hand experience make for a powerful combination.  Whether his decisions have been smart or dumb, he will point it out to you.  I found this month's article to be particularly strong.  

In it, Brodsky provides his "10 most important lessons learned" over his career as an entrpreneur.  One of them warns "you have no friends in business, only associates."  Of all the points on his list, I find this to be the one tested the most and with widely varying results.  Regardless of the outcome, I believe most people would tell you that when they have tested this rule that the outcome was different than they expected.  And the average seems to favor a "for the worse" outcome.  

Brodsky admits to his own conflicts around this one.  We want so badly for it to be different, but the reality is that the business relationship is different from, but intertwined with the friendship.  Some choose to ignore the connection or the impacts, but they do so at their personal and professional peril.

Without providing you a psychoanalysis of entrepreneurs and partnerships, I will simply suggest to you that you strongly consider AND DISCUSS the path forward if considering a business partnershsip with friends.  Two classmates of mine from Darden actually had a case written about their experience leading up to considering a partnership.  Theirs has progressed well to date (with Atlantic Caseworks), but due in no small part to their front-end efforts to assess fit and create a framework for their relationship.  

A failure to consider this and to get it on the table will lead down a poor path.  Never before has it been more true to say that "when you assume, you make an ASS out of U and ME."  Friendships can survive on assumptions and random breakdowns in communications.  Businesses can be crushed by them.  This becomes acute when personal finances become involved.  And in small business, the business finances are your personal finances.  And in a partnership, you share that.

To many, starting business with friends seems like the most natural thing in the world.  It does have its pros, but I urge you to consider the cons and their depth and breadth.

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