Doing Business With a Friend? Five Steps to Take First
We’ve all heard the saying: “Don’t do business with friends.” People don’t believe in doing business with friends for various reasons, like stressing over business details remaining confidential and having fears about the friendship breaking down if things don’t go as planned.
At the core of it, though, I think most people don’t want to do business with friends because money muddles things. In other words, the reluctance people have about doing business with friends comes down to their relationship with money. My questions for each person reading this article are: “What is your relationship with money?” and “What is it about your relationship with money that influences your ability or inability to do business with your friends?”
Only you have the answers to those questions. However, after you explore your answers to those questions, if you decide to do business with a friend, here are five steps to take first. All of these steps involve having open, honest conversations with the friend you’re considering doing business with.
1. Understand Motivations
One of the most important things to establish before working with a friend in a business capacity is understanding their motivations, as well as your own. By understanding your friend’s motivations (and your own motivations), you can predict how the proposed business engagement might pan out.
For example, let’s say you find out that your friend wants to freelance for your graphic design agency to gain more work examples to add to their portfolio. You want to give your friend an opportunity to help them out — and also because you’re facing a staffing shortage. Given those motivations, you might predict that the engagement has a strong chance of playing out in a win-win manner. Your friend will get valuable portfolio samples, and you’ll get the assistance you need to keep your business moving forward.
2. Set Clear Expectations
Once you understand your friend’s motivations, you can discuss expectations. The discussion of expectations includes determining what your friend’s commitment level to your business will be.
Let’s return to the example of the friend freelancing for your graphic design agency to gain more portfolio samples. In that situation, you and your friend should reach a mutual agreement on details like which projects they’ll be working on (the exact scope of each project), what the deadlines are, any pre-set number of hours they have to meet, how they should turn in the work, what the feedback process will involve and more. You should also discuss any client confidentiality matters, like if there’s a client that’s signed a non-disclosure agreement with your agency, so your friend knows not to use that work in a public portfolio.
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3. Determine Payment
Payment is part of the conversation on expectations, but it’s so crucial to discuss that it needs its own section. Some friends might be happy to offer their services to you for free; if you both feel comfortable with this, talk it out, discuss boundaries (more on boundaries later) and have regular check-ins to make sure no resentment builds up.
However, your friend might expect payment, and you might expect to pay them. After all, your friend is offering you a valuable professional service that they spent time and money cultivating. Again, it comes down to having a frank discussion — find out what their standard rate is, and if they bring up giving a discount, explore that possibility to see if they are truly comfortable with it. You might determine that it’s best to pay your friend their standard fee, despite their insistence otherwise. In addition to finalizing how much you’ll pay your friend, you should reach an agreement on when you need to pay them, as they might expect payment at intervals rather than at the conclusion of the project.
4. Put Boundaries in Place
Expectations and payment need to be supported by a clear understanding of work boundaries on both sides. Trampling on boundaries in any work setting is bad and gets even worse when a friend is involved.
Let’s say you end up hiring your friend to do freelance work for your graphic design agency for a three-month period. You’re going to pay them their standard rate at the conclusion of each project. Your friend indicates that they don’t work on Fridays, and you tell your friend that you’re not available to answer any questions until your morning meetings conclude each day. That’s a situation where both of you are establishing boundaries. You now know not to ping your friend about work matters on Fridays, and your friend knows not to ask you questions about projects in the mornings.
5. Have Regular Check-Ins
Even by taking the steps above, there’s still the chance of emotional fallout if things go astray. To minimize the chances of emotional fallout, have regular check-ins with your friend (perhaps once a week or once every two weeks), so you can both touch base and see how things are going.
Think of these regular check-ins as a game plan for dealing with a potential emotional fallout. With regular check-ins, you both have the opportunity to address any issues before they turn into bigger problems. For example, if your friend missed a few deadlines, you can calmly find out why that happened and put together an action plan to ensure it doesn’t happen again. Or, if your friend feels like you’re micromanaging their work, they can voice that concern, and you’ll know to take a step back. During these check-ins, remember to show some gratitude as well. Both parties should tell each other what they appreciate instead of solely focusing on what needs to improve.
I know that I wouldn’t be where I am today professionally without some of my friends who helped me along the way. If you take the right approach, doing business with your friends can have great outcomes for both parties — you’ll lift each other up professionally.