Did you know 80% of business partnerships fail?
This is likely the reason the old adage ‘don’t do business with friends or family’ exists.
Yet, people still go into business with friends.
If the failure rate is so high, then why do entrepreneurs keep doing it?
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Being an entrepreneur is tough and lonely. It makes sense entrepreneurs reach out to people they already trust to help them build their business. Over the years, I have hired friends, and it hasn’t always worked. I’ve had to make the tough decision to part ways professionally with people who are important to me and have unfortunately lost friends along the way.
But it’s not all bad news.
I strongly believe it is possible to create a successful and thriving business with a friend. In fact, working with a friend can be a real advantage, so long as you’ve partnered with the right friend.
The digital business I’ve created with a close friend of mine is testament to the fact when it works, it really works. We’re now a multimillion-dollar company with more than 100 global employees servicing thousands of clients.
So, what did we do that other friends and budding business partners out there can learn from?
Our story begins at university. We discussed starting a business during those days, but like of these conversations, our excited chats never turned into anything more. Years later, we were in separate jobs, leading separate lives, when we both had the same lightbulb moment. So Mez and I met for lunch, and the rest, as they say, is history.
So what should you do to make sure your business partnership thrives and your friendship survives? Here are four tips.
1. Understand and empathise
In the early days, Mez and I spent countless hours in the confined space of my bedroom at my parent’s house. We were two guys and a whiteboard, without much room to move. We worked all day and all night coming up with ideas and calling everyone we knew to hustle for business.
The early stage is the hardest. There were times when I wanted to throw in the towel, but Mez was strong and resilient. One time, when we were driving to a meeting with a potential client and needed fuel, we realised we were down to our last $20 and couldn’t afford to fill up the car. Luckily we closed the deal.
My biggest piece of advice is to have each other’s backs. There will be times when your business partner is away or sick and you will have to pick up the slack. Remember, a good business partner will do the same for you under similar circumstances.
It’s also important to be on the lookout for signs your partner needs support.
Typically, people will struggle with different aspects of the early-stage journey depending on their personality or responsibilities. If you’re stuck on something, your partner may find it an easier challenge, and vice versa.
Being able to anticipate when you need help from each other is important. I have learnt to read every possible emotion on Mez’s face and he can do the same with me.
Having access to a helping hand at all times is one of the reasons why working with a supportive friend can be so valuable.
2. Use your strengths to your advantage
Mez and I are very different. Mez is calm in a crisis, whereas I wear my heart on my sleeve. I have good attention to detail and Mez is an expert networker. Mez doesn’t always follow processes, whereas I am more structured.
However, Mez and I have always had the same business goals.
Being friends and business partners works because it’s okay to be different. As long as you focus on key outcomes, a shared business vision and a 50-50 partnership.
Business partners need to recognise the strengths of each other and leverage those to make strong decisions. We have always stayed true to our individual strengths and this has helped our business grow.
Having a trusted business partner on hand as a sounding board means you get support for your ideas and a reality check for those that aren’t so good. Mez and I bring the best out of each other because we have unique experiences and opinions.
3. Intertwine your vision and goals
No matter how well you get along with someone, you’ll never work successfully together unless your vision and goals are aligned. It is important to be open and vocal about these goals at all times, so you’re clear on the direction the company will take.
You’ll share a passion for seeing the company thrive. However, if you disagree on what that looks like, that’s when you can run into trouble.
It’s important to ensure you are always on the same page and don’t undermine each other. That doesn’t mean you will always agree on everything immediately, but it does mean you need to have a productive way to find agreement.
4. Let the friendship thrive outside of work
If your business partner is a friend, the lines between social and professional time can blur. Before you know it, most of your conversations end up being business-related.
Business partners need to create boundaries between what is business and what is personal. It’s important to give the friendship room to grow alongside the business and that means carving out time to spend on non-business activities. Mez and I regularly catch up outside of work. We both love cars and will go for drives together.
Running a business is very challenging and running it alone can be isolating. Having a business partner can give you motivation and support, during good times and bad. And if that business partner is also a friend who always has your back, then what could be better than that?