| What is the 1st step one must take when thinking | | | | of friends that went into business together and it didn't |
| about buying a business or going into business with | | | | work out surround me. I currently am evaluating a new |
| family or friends? Stop - and allow yourself careful | | | | venture that involves this same subject matter. |
| consideration. | | | | So what do you do when a friend offers you a very |
| I think the concept of going into business with a life long | | | | interesting business opportunity? I say STOP, and |
| friend, or a good buddy from college, or your brother, | | | | move beyond the idea, and analyze the business deal. |
| dad, sister is a fairly common thought process. Family | | | | I've heard someone say STOP and get an MRI on |
| run businesses are prevalent throughout the business | | | | your brain, but I prefer the non-medical approach. |
| communities. There are many successful family | | | | There are steps that can be taken to mitigate some |
| businesses, so they must be a good idea - right? | | | | of the pitfalls of such an arrangement and these may |
| My short answer is I'm not so sure. | | | | vary with the type of venture whether buying a |
| Businesses that have the ability to sustain over long | | | | business with family of friends or starting a business |
| periods of time- 10 years, 20 years or more to me are | | | | with family or friends. |
| classified as successful businesses. But do the | | | | Below are a few step that can be taken and I will take |
| businesses sustain at the expense of breaking apart | | | | when evaluating the opportunity of buying a business |
| family values, feelings, or structure? Are holidays at the | | | | with a friend. |
| dinner table among the "family business associates" | | | | Does the concept make sense? It must be a well |
| enjoyed as a family or another business meal, or | | | | thought out concept, and numbers must support the |
| worse? | | | | concept. The business plan needs to spell out |
| I think there are many success stories of family | | | | everything, and then it must be followed. Moving |
| businesses or buddies that go in together to buy a | | | | forward without a plan is a bad plan. |
| business. But, I also think the number of family/"friend | | | | Draft the terms of the agreement between the parties |
| partnership" businesses that fail are large, and the | | | | involved. Expectations, Roles, compensations, exit |
| number of businesses that are bought, started, or run | | | | strategy, are among the items to lay out in such an |
| by buddies or family members that adversely affect | | | | agreement. |
| those important relationship may even be larger. | | | | The agreement has to be a win/win for those |
| Why is it so easy to come up with the idea of asking | | | | involved. The more situations that can be addressed |
| your buddy to go into xyz business with you? I think a | | | | going in can only help to mitigate problems that may |
| big part is the feeling that you know your buddy or | | | | occur later on. |
| your brother/sister. But the missing link here may be | | | | Plan on X% more time and X% more money than you |
| that you know a certain part of that person real well, | | | | planned to open the doors. |
| and the other part- the business part, - you may not | | | | Have a long term plan. Success can be surprising |
| get to know until it is too late. | | | | sometimes, and possible success and benefits to |
| I can speak of this matter from experience as I have | | | | those involved may be best addressed upfront |
| been in business with both family and friends. For me it | | | | Part of me says I've had a fair amount of good long |
| has worked out. I certainly experienced some bumpy | | | | term business relationships which are valuable, but I |
| roads along the way, but overall I have been happy | | | | value the long term friendships I have more. Good |
| with the end result of those business/personal | | | | friends seem farther and fewer between than good |
| relationships. | | | | business partners. |
| But I have always felt that my experience may have | | | | What do you do when your buddy approaches you |
| been more the exception rather than the rule. Stories | | | | with this idea to buy this great business? |