Flying solo on any business venture can be a scary concept because there’s only one person that can be held accountable. YOU! Let’s face facts, it’s easier to sleep at night knowing that if shit hits the fan, the shit will fall onto multiple heads.
However, it can also be heartbreaking to split the profits from a successful investment. But that’s not where the main concerns lay when working with friends or family on a project, it’s the prospect of having a full-blown barny with your loved ones’ over business decisions.
A lot of people form business partnerships with established peers, particularly when it comes to BTL investments, but is it a good idea? Here’s some food for thought on the issue to help you piece together your own conclusion…
Advantages of investing with friends and family
- It’s easy and convenient working with someone you know. Sometimes it’s inevitable, you need a business partner whether it is for financial support or additional expertise, and in that situation it’s easier to work with someone you already have an established relationship with.
- You’re working with someone you know and trust. Knowing that your business partner isn’t going to pull a fast one can be a major stress reliever.
- Friends and family are generally much more aware and immune to each others habits.
- You’ve already adapted to one another’s personality on a very specific level, whether it be on friendship or family orientated level, so you have a fundamental understanding of what one another are like.
- Responsibility is shared, so when the plaster starts to crumble, you won’t be alone under the doorway. As already mentioned, it easier to go through the tough times with loved ones.
Disadvantages of investing with friends and family
- You’re not only putting a business venture on the line, but also your relationship with your loved one. You may find yourself in a situation where you’ll have to pick between the two if things go badly wrong. Which would you choose? You end up walking away with a broken heart as well as a broken business
- You’re not in complete control. This can be a big problem for those with strong controlling complexes. You may find yourself in situations where you can’t always have things your way, regardless of how passionate you may be about the issue. Failing to compromise will cause major tension, it means someone in the camp is going to have to live with a decision they despise.
- By working with friends and family you may lose a particular professional edge. You’re not thrown into an environment where you need to compete or impress other people, and that can hinder your progression. If work feels like a social gathering as opposed to a business environment, which it easily can when you work with friends and family, then that’s probably because you’re not being professional. It’s easy to slip into the “comfort zone” when working with friends/family.
- Friends and family can be more forgiving. That’s not necessarily a good thing, because you need to run a tight ship. But it’s all too easy to be slack when your business partner is a friend or family.
- If you’ve been a friend to someone your entire life it’s big ask to suddenly think of them as your business partner between working hours. You’ll probably still always see them as your friend. That puts you into a difficult position, especially if your partner doesn’t want to pull his/her weight. What are you going to do? Shout at a friend? That’s not going to work because your friend is comfortable with you, so he/she will just tell you to eat royal shit.
- It’s amazing how powerful money can be. Profit, or the lack there of, can cut through kinship like knife will cut through hot butter. Remember, you don’t stand to lose a business partner; you stand to lose a business and someone you care about.
- Not only are you going to be working with this person but you’re also going to be socializing with this person or perhaps even living with this person. Can you really be around someone for so long in a working environment and a social environment? It could start to feel like you’re at work all the time.
- Your relationship with your friend/family will transform into a combination of business and friendship. So if there’s tension in the office, they’ll also be tension outside of the office.
- The focus of the relationship can start to lean towards business, success, and financial profit, so soon your entire relationship will be about work and then the fundamental factor that made the business partnership possible in the first place will be lost.
- Emotional attachments with your business partner can affect your business judgement. For example, you may end up making decisions that will help your relationship as opposed to helping the business prosper.
- You may love, trust and respect your family and friends but that doesn’t mean they would be your ideal business partner. Hey, you may want to spend the rest of YOUR life with them… but that doesn’t mean every single minute.
- Consider why you’re actually teaming up. Is it because they have a lot to offer the business or perhaps simply because it’s an easy option? Make sure the partnership is built on pros that will add something positive to the development.
- If you’re considering working with a friend or family you should first establish whether you want the same things out of the proposed business. Make sure your aims and objectives sit well with each other. Do they share your vision of how to run your business and where it will be in one year’s time. Two years time? If you can’t agree on the fundamental business plans, then it’s best to pull out before you invest any further time or money into the project.
- Even little things like differing on paint colour can cause a strain between friends and family. It’s important to delegate specific rolls with anyone you work with, so you don’t cross paths too often. For example, with a development project, one should purely concentrate on interior design while the other handles the construction.
- Be fully aware that if things go wrong you don’t only stand to lose your business, but someone a lot more important…