Going into business with friends ? pitfalls to avoid

Some of the most exciting global businesses were borne not just of a great idea but of a great friendship ? Innocent, Net a Porter, not to mention Marks & Spencer. 

You have a shared vision, shared interests, shared social groups. But as the pressures of a growing business takes hold, how do you ensure the original chemistry and dynamics that brought you together stay strong in the boardroom? 

Kloud is my second joint venture with co-founders John Barratt and Ian Maslin. We came up the ranks together as consultants so had done the groundwork before real money, time and personal risk came into play. We?ve seen things get ugly when friends partnered in business so we laid out a manifesto to support Kloud?s success and safeguard our friendships.

Share the same vision

Have clarity around why you?re setting this business up. A stake in the ground protects your business and drives growth. We completely understand where we?re going, and we?ve built a culture around that. By setting the tone from the outset we keep morale high, attract top talent and keeps employees loyal, delivering great client service.

Friends go into business together driven by loneliness or insecurities about starting up alone; your purpose has to be bigger than a personal agenda.

Developing and supporting complementary skills sets and leadership styles

Understanding one another?s strengths and weaknesses is key. Our mantra ?Only do the things that only I can do? has built clear divisions of responsibility, which has filtered down to the management team and our employees.

All strategic decisions are democratic and we go with the majority. Not being 50/50 partnership helps as that third person dilutes frictions or tensions and can facilitate resolution. Engaging a non-exec if there?s two of you can help.

Drawing lines between personal and professional

We spend a lot of time together. On a day-to-day basis know how to manage each other. Bigger picture moments are more challenging and keeping a business conversation from becoming a personal confrontation can be difficult. A criticism or brush-off can be hurtful, especially at stressful times. 

It?s about open communication. Have the courage to be brutally honest rather than worrying about hurting someone?s feeling ? and to take constructive feedback too. Treating your partner as a professional, a grown-up, is key. This behaviour will ideally be mirrored throughout the business.

Preventing the business coming between your friendship and vice versa

Friendship can compound the stress of running your own business. Over time, we?ve learnt to manage set-backs and demoralising moments, and it?s these times the benefits of working with your friends comes into its own ? they understand what you?re going through.

Day one, we promised each other that we would work hard and remain friends throughout. This takes commitment. Every month we sit down to review and feedback. It will be something like, ?That major lead kick-started this quarter but your 4am emails need to stop.? This helps us re-group, move forward and have a beer together. Fun is one of our values and we need to remember that. 

What to do if it all goes wrong

We holiday together, share family celebrations… there?s a lot of trust and history. But our business has to be protected by more than goodwill. We?ve underpinned it with a robust operating contract that maps out the business? ownership. 

Things move fast so review these together every year. It gives you the confidence to make those bold decisions and a recourse in black and white. Staying true to your mission, brutally honest communication and clear rules of engagement are vital. Keeping these in mind will help protect your business and your friendships.

Matt Lawrence is the chief commercial officer of Kloud.

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