Partners, Friends, and Uncommon Goals
A while back, I saw a post at The Entrepreneurial Mind on friends as partners. Since then, I have been meaning to write about it firsthand.
This is not that post. At least, not in full or as I envisioned it.
However, I came up with a great analogy for one of the problems we had in my business. We love to watch The Phantom Gourmet, a Boston show on channel 38 each Saturday and Sunday morning. It’s a food and restaurant review show.
One place they profiled recently is a healthy fast food place started by two friends, who’ve known each other since they were five. Now, they pick on each other a lot while they’re working, and disagree about things, but they both wanted to start a restaurant, and they knew what kind.
My experience with friends getting together, all very informally and that was one of the problems, lends itself to a restaurant analogy. Imagine getting together and starting a business with some people, and you want to have a restaurant. You figure you all are talking about a formal sit down place, reasonable and family oriented, but not cheap, with a typical wide-ranging menu. That’s what you have in mind, after all, and nothing the others have said makes you believe they mean different. Come to find out that some of your partners meant they wanted a fast food place. Some wanted a ritzier place. The fast food folks found that some wanted it to be a fried chicken joint, and others wanted to serve burgers.
You end up with a hot dog vending cart, because nobody could agree, most of them never had any intention of putting in any money, and it was easy to set that up on the cheap. In theory, it can be used to bootstrap to something bigger. Trouble is, it really only needs one person to run it, not a whole partnership, and it only generates money enough to pay one partner, but other partners want a piece of it too, but don’t want to expand the business to multiple stands and spend full time manning one to make that possible. When you do need extra or fill-in help with the stand, you could pay someone $10 an hour, but partners want the work to go to them for $30 an hour. Partners also don’t want you to start up extra carts and hire people off the street rather than them, but they don’t want to staff them, so nothing is allowed to happen where you could make a profit on lower cost labor, making the other partners some money for doing nothing.
Because there is no immediate return in planning for the full restaurant the hot dog stand will lead to, the other partners won’t bother to put any legwork toward it, leaving it entirely to you, even though you’re running the stand full time to help bootstrap the whole thing.
It’s an excellent analogy for my business. One of the big problems was lack of common goals and focus.
Had a VERY similar experience with a business I started with some friends two years ago, accept it was a marketing business.
We had good intentions, but ended up with the marketing equivalent of the hot dog stand, selling “bits-and-pieces” things like business cards, websites, logo-design - you name it. As you mentioned, the theory was to bootstrap and create a great business aimed at Fortune-500 type clients. We had a few successes from contacts, but arguments over the most stupid things (such as a two day argument on our letterhead!) sapped time and enthusiasm.
These arguments were actually a symptom of a bigger problem - some individuals in the group has trouble taking criticism. I guess they couldn’t understand why their long-time buddies were suddenly being so harsh on them. This created a LOT of tension and resentment, and ultimately the business never really went anywhere.
Unfortunately, it took a turn for the worst when I discovered one of members of the group was taking money from the business account to pay for personal items, such as his rent. The rest of us simply decided to shut it down.
The business had a total lifespan of 5 months. However, even if the stealing didn’t happen, I don’t think the business would have lasted much longer. The problem was that we assumed that equality in friendship could be transferred to a business without and problems at all. Wrong, wrong, wrong.
I’ve learnt my lesson - you CAN start a business with friends, but the business cannot be structured around the friendship. Everyone needs the maturity to both deliver and accept criticism. Finally, the business HAS to come first - if not, the business will probably never get off the ground which will hurt the friendship anyway.
Posted by on 03/28 at 07:45 PM
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