constellex

One of the most important components to running a successful business is just that, running a business. It is sometimes hard to do so, but you have to leave your personal life out of it. A perfect example of this is including friends in your business ventures. If you can honestly analyze the situation and see that friend as a great contribution to the team, then bring them on. On the other hand, don’t just include them because they want to help and you don’t want to be mean. A person could be your best friend, but your worst business partner. Those two jobs do not include the same laundry list of qualifications and I think a lot of people don’t realize that.

Ok, so you decided to make your friend a business partner. Here comes a possibly awkward situation… contracts. Being good friends doesn’t mean they won’t try to screw you if given the chance. It’s human nature and you have to realize they will choose themselves over you any day. Therefore, put some checks and balances in place to avoid possible trouble. Things like a partnership agreement and restrictions on the bank account are a good start.

As I had mentioned in a previous post, Sally was removed as a partner in our company. In our agreement, we had planned how to handle that type of situation so it was simple and easy. Here is a list of some ideas to include in a partnership agreement:

• Name of the partnership and its members
• Contributions of each member
• Profit and loss allocation
• Authority and management responsibilities
• Adding or removing a partner
• How to resolve disputes
• Amending the partnership agreement

So when a friend asks you to be part of the business and you don’t think it’s a good idea, either try explaining it in a logical manner or use the infamous “it’s not you, it’s me…”

The correct answer is one, but he should be able to hop on one foot and rub his belly at the same time… The point to take from that probably not too humorous statement is that you should not have a business partner who specializes in changing a light bulb, unless of course your business is in changing light bulbs.

This topic, like most business-related ones, is filled with gray areas that depend on your situation. I plan to talk about a lot of business ideas as time goes on and am simply sharing my thoughts and our situation, so don’t take anything as absolute.

Overspecialization is a problem that I have seen in corporations, but it is also something that the little guy should really watch out for. A waste of space in a corporation most likely won’t cause any terrible effects, but if you’re starting a small business then it could really hold you back. A fun little fact about our company is that we started out with three partners. Marc and I have technical backgrounds, so we wanted someone else to handle the business side of things. Sally, in case he wants to remain nameless, is our very smart friend who came on-board to do just that.

There were other attractive aspects to having a third partner that included more capital and some good contacts, so we signed him up. Sally handled our taxes for the most part, which was nice, and also did some other administrative things. However, there just wasn’t enough work for Sally to remain a contributing member of our team. The amount of business tasks were few enough that Marc and I could handle them without a problem, so we had to let Sally go.

Since we are using this business as our source of income, we couldn’t have Sally taking a third of our profits if he wasn’t doing much. We fell victim to overspecialization because Sally handled business tasks, but couldn’t contribute in other areas. If Sally was also a programmer, then there most likely wouldn’t have been a problem. Since we are a small company, there just wasn’t enough activity for Sally at this point in the game. Sally, being the great guy that he is, completely understood the situation and accepted a check for his share of the company on his way out. Marc and I are still great friends with Sally because he understood that business is nothing personal, it’s just business… but I will get more into that next time.