A few months ago I had the opportunity to go into business with a close friend.
The business was centred around real estate which is something we are both passionate about.
On paper, the arrangement looked attractive:
- my main contribution would be financial backing with little management of the day to day operations;
- the profit share was fair and profits were expected to be generated within a short timeframe;
- we could scale as quickly or as slowly as desired; and
- start up costs were minimal with no employment of staff immediately required.
But once we started delving into the nitty gritty of the arrangement, it started to become clear that perhaps we shouldn’t become business partners:
- I thought that I had made it clear that I was more interested in being a largely silent partner with only minimal involvement in the running of things. My day job is hectic and requires long hours. Any side gig needs to be low effort. My friend wanted a lot more assistance than I could give.
- we had very different ideas regarding the rate of growth to pursue. I wanted to go slow for 6 months before ramping up while my friend wanted to go full steam ahead from day one.
- my friend also wanted to very quickly bring other people in to help fund business growth. I wasn’t OK with this as it would over complicate things and in my view wasn’t necessary.
- my friend wanted to keep the business relationship free and casual while I wanted to formalise things via legally documented partnerships and the like.
So as it turns out, we really weren’t on the same page at all while, at first at least, we thought that we were.
I’m glad that we came to understand each other’s position before we went too far with the venture. And we’re still close friends today.
But it does highlight how quickly and easily mixing friendships and business can go sour. I’m just thankful that I didn’t spend any money before we came to the above discovery.
@mazzle