It seems like a foolproof plan: Go into business with someone you know and trust, share the same values with and the person who has your back in every situation.
Although those are strong qualities to have in a business partner, coalescing business and personal life can cloud your judgment, especially when it comes time to make critical decisions. And when conflict arises, your brokerage won’t be the only aspect of your life that suffers.
To best circumvent the most common incidences when doing business with friends, follow these best practices:
Make outside relationships.
Bringing other people into the mix — not necessarily inside partners, but other stakeholders — keeps your partner and you focused on the bottom line. Accountability is far more pertinent when investors are involved.
Are you less likely to get things done on time if you know the only person relying on you is your friend who’s likely to cut you the most slack? Probably. Knowing you have some wiggle room with deadlines and projects might lead to procrastination.
To combat easy slacking, establish regular check-ins with external partners or investors, like monthly progress meetings. Create a series of deadlines and goals with responsibility equally distributed among you and your partner(s).
Furthermore, external opinions help depersonalize business decisions, so no one is left feeling like their bad idea was discredited on a personal level.
Talk about money right away.
While it’s considered déclassé to talk money with your friends, that rule is clearly not applicable to a business relationship.
Don’t be shy, either. Keep the budget clear, and be honest when there are bumps in the road.
Further, it’s best to document all financial comings and goings. In case of discrepancies, documents allow both parties to easily reference the past without debate, minimizing your risk for awkward, finger-pointing arguments.
Be sure to discuss your finances often. Both partners should be in the loop to make the best business decisions based on the capital available. Don’t let your knowledge of your friend’s personal life deter you.
Even if he or she is struggling to pay a mortgage, and you don’t want to put any more added financial stress, it’s better to be open and honest — for the sake of your business.
Make sure your skills are complementary.
Going into business with someone just because you’re friends isn’t the recipe for a successful brokerage. Don’t do anyone favors, here — pick the individual who has the skill set you need to develop a thriving business.
It’s not just about getting along — you should each bring uniqueness to your brand. Otherwise, you’re probably entering a partnership out of convenience and not prioritizing creating a dynamic, strong brokerage.
If you’re a hyperorganized number cruncher, look for a savvy sales go-getter to handle client-facing aspects.
Not only is it smart to have separate skills, but independent expertise minimizes risk of creative conflict. You’re not likely to argue with an advertising platform when your partner has 10-plus years of real estate marketing experience.
Instill trust in one another.
Of course you trust your friend — why else would you be so close out of choice? Having trust and keeping trust are two different hurdles, though.
The easiest way to maintain trustworthy relationships is by aligning goals and staying on the same page.
If you’re each directing separate parts of the business, it’s easy to focus on what you know and disregard what you don’t understand. In which case, your lack of knowledge might cause you to assume your partner is purposefully leaving you in the dark.
Talk big picture and how you’re both managing your responsibilities to meet the bottom line — a goal you both can understand regardless of semantics and technicalities.
Although there are disadvantages and potential drawbacks, that’s not necessarily the case for avoiding business with an acquaintance or family member. Sometimes it works out — really well, in fact. Just be prepared that when it doesn’t work out, you’re sacrificing more than a business partner.