Disclaimer: I live today to write this blog because of the munificence and support of my friends from school and college. This post is not about them but the lessons learned from getting into a business relationship or signing up with service providers who are friends.
I’d started a buy-sell agency many years back in Bangalore and requested a college mate to take care of it as I was based out of Chennai those days. Soon I had to shift my base to Bangalore as the business had become my only source of income and could not accommodate him. He had diligently taken care of the business in my absence but both knew a day would come when he had to find a job or start something on his own. There was also the danger that he was not gaining any experience in his field of study as all the years spent in my business wouldn’t fit in his resume. I had to confront him and ask him to leave both for his and my benefit. For both of us it was not an easy transition but it had to happen. I’m glad our relationship is still intact because he understood the futility of continuing as a caretaker.
Lesson learned: When your intention is genuine, you can take tough decisions without harming the relationship.
Tidy profits started getting visible in my business and I was advised to spread the risk and an opportunity came up to start a small eatery in posh Anna Nagar in Chennai named ‘Step Inn’. We were three ‘in absentia’ partners, with me in Bangalore and the other two in different cities managing the business thru one of the partner’s relative who was a catering student. He started off well, doubling up as the chef with another cook to assist him and we could sense that the profit margin was much more than what we’d imagined. And the outlet had become a favourite of locals. One of us had even thought of shifting to Chennai to manage the business.
Soon I guess greed took over aided by our remote control, rather the lack of control! We saw business slipping away from our hands and since each of us was busy with our own activity it was difficult to stem the rot. Parallelly, my main line of business was starved of capital as I’d diverted a significant portion into this business. Bitterness and anger gave way to helplessness as we wound up the business. I still believe the food business, if managed well, is a great idea. Once again, mutual trust among partners helped us maintain good relationship till today.
Lessons learned: 1. Cash flow is sacred. 2. Plough back profits of a business back into the business. 3. When you diversify, learn about the new line thoroughly. 4. Remote control does not work, at least in a small business like mine.
When I was trying out every conceivable business during my bleakest moments, the MLM business from the USA made its appearance in India and a much likeable and valued friend enlisted me as his agent assuring me a bright future. He was a thorough professional, helped me out with a lot of tips and even loaned me an amount to kick start the MLM business. I promised him the moon and gave up after a half- hearted attempt because I felt I didn’t fit into the mould not realising that stagnating or breaking the chain spells doom in this line of business. My friend was rightly furious and we had a messy exchange of words. Finally, I did square up but the experience permanently eroded what was a mutually respectful friendship.
Lesson learned: Don’t mislead or misguide your friends when they try to help you.
When you sign up with service providers from your friends pool, it is possible that out of regard or affection for you they quote significantly lower than the market rates. You start taking them for granted and nudge them for trifles or make unreasonable demands. On the other hand, they may also take you for granted and not give importance to your work. The net result is you are unhappy with the results and the relationship is strained. Luckily, when I decide I value the relationship more than the business, I express myself assertively and hold on to the relationship.
Lesson learned: As far as possible avoid doing business with good friends. If at all, be a thorough professional and keep your word. Don’t ever take the other for granted.
These are MY experiences and the context varies with each one. I know about many lasting friendships in business because they’ve mastered the art of separating the people from the problems. I hope my account helps some of you to get your act together, just in case…..
Very well depicted and morals are highly appreciated. Thank you!
Highly appropriate, CK. It is only natural, this is my generalization, that friends are one of the first points of contact when starting a new business. As you rightly pointed out, it is a delicate balance and has a super thin margin of error. Thanks for sharing the lessons learned from each of your experiences. Points worth considering!
Thank you, Sethu. A ‘delicate balance’, it is.
Liked the post. The part of not remote controlling your business resonated with me. One needs to get one’s hands dirty. Be hands on in small businesses.