Getting Into Business With Family and Friends

If you’ve been a part of the Cashflow Diary for any length of time, you know that my wife Popi and I are business partners.“Yeah, so how does that work?” people often want to know.In a recent Facebook Live, Popi shared some thoughts. Watch that video if you get a chance, and I’d like to elaborate and add some more insights and tips.There really is no right or wrong answer when it comes to the question: Should I go into business with my family members and/or friends?I’ll just tell you what I know.

Communication is crucial.

You and your business partner need to be committed to honest communication. You need to feel comfortable enough with the other person that you can be absolutely honest, even at times when the truth might hurt.One benefit of going into business with family and/or friends is that you probably already know each other pretty well—strengths, weaknesses, etc. And the better you know each other, the less surprises you’ll have.“Communication is key,” Popi says. “There is no one-size-fits-all when it comes to friends and family. What I’ve found is that everyone is unique. Every couple, every pair, has its own unique dynamics. Every marriage partnership starts off with love and/or respect. Each individual partnership will have to figure out what that means to you.”

You need to share values, beliefs, and philosophies.

I’m not saying you have to agree with each other about 100% of the things 100% of the time, but you need to agree on the main things. And you need to agree on what things qualify as main things. Let me give a random example. Let’s say you are very cautious and risk-aversive, and your potential partner believes in taking huge risks all the time, every day.There’s a chance that the two of you might balance each other out, but this can only happen if you’re both very willing to compromise. If you’re not, if no one wants to meet in the middle, then this partnership will be a disaster.

You really need a high level of trust.

Often, this is a big reason why people do choose their family or close friends as business partners, because the trust is already there, it’s already been proven, already a given.But just because someone is related to you, or has been in your life for a long time, doesn’t automatically make them trustworthy. If you have a friend or family member who has a history of not being able to be trusted, then going into business with them is a bad idea.

Your individual skill sets should be complementary.

That means they shouldn’t be exactly the same, but they shouldn’t be so opposite that they can’t even both be used in the same business.Your strengths should be your partner’s weaknesses and vice versa.The more skills you each bring to the table, the better your business will be.

You need to like being around each other a lot.

If your potential business partner is your spouse, and you already live together, and have been together for a fairly long period of time already, how are you going to handle being together ALL THE TIME?No two couples are the same, but some really need their space on a regular basis for their “together time” to be thriving and happy. Are you both introverts? Extroverts? One of each?If you’re someone who believes that absence makes the heart grow fonder, then maybe you shouldn’t go into business with a loved one.

You need to clearly delineate each partner’s responsibilities.

Things need to be fair. You need to write this down. You need it all written out—who does what and when and how.What are your work habits like? Is one of you a workaholic and one of you not so much? Will you handle the workload equally, fairly? Do you anticipate that one person will do a heftier share of the work, causing bitterness in that person?Is one of you in charge, or are you equal partners? What happens when you can’t agree?Are you each contributing/investing financially? Equally? How will you each get compensated?

Don’t expect perfection.

Be realistic. No one is perfect. No partnership is perfect. But that doesn’t mean it’s not worth it.The expectation that things will always run smoothly with your business partner destroys your ability to actually forge the partnership. Coming in with the expectation that it will be perfect? It poisons our ability to be malleable, change, adapt, hear and recognize the genius and strengths of the other person, to be able to work together. When talking about our marriage and partnership, Popi says, “There has been a lot of stumbling, a lot of growth, a lot of pain that we’ve had to work through. You can’t reach a mountaintop without going through a lot of hills and valleys first.”One of the challenges is how we interpret definitions of words. When you look up the word perfect, it has more to do with being complete or made whole, not without flaw.Perfection is a process, not a destination or a state. Change, in and of itself, is messy at the beginning. But it’s also part of the process. 

Bottom line?

Don’t take this partnership thing lightly, especially if you’re considering doing it with someone close to you.Having a partner means getting to share the workload. Having twice the ideas. It means a different, fresh perspective on problems that arise. It means being able to get more done, increase cash flow, even multiply cash flow. The biggest reason people AVOID going into business with a friend or family member is that, if something goes wrong in the business, it has the potential to ruin the relationship forever. Choose wisely.