in Career

Friends as Business Partners

The 3 of us in school in 2001

The 3 of us during school in 2001

I am a big fan of quotes and one liners, but it took me experience to believe in the truth of this quote by John D. Rockefeller – “A friendship founded on business is better than a business founded on friendship“. Now I can verify that. I started SaleRaja with 2 of my closest buddies from school whom I have known for over 10 years. It looked like a perfect match then, but I was to realize later that while it is important to have somebody trustworthy as your partner, friendships often carry other baggage which can create problems, particularly when the business is in trouble or growing well.

We ended up parting ways soon, as our vision for our personal future and the future for SaleRaja did not align. It was a perfect case of both sides being right but the situation being wrong. We were the right people in the wrong place. We did not share the same vision for the business. We always thought that since we were so good friends, we would always find a mutually agreeable path in case of conflicts.

We could not have been more wrong. There were times we ended up accepting what the other said as a “friendship compromise“, and not as a “business decision“. And then there were the tough times, when we decided to part ways. We are still friends, but it is, and will never be, the same. Now if I see friends who want to start a business together, I say to them that they have to be prepared for the fact that their friendship might not be the same in a couple of years time.

I think you need to friends with your partners to run a successful business. It is a necessary condition in my opinion, but not sufficient in itself. Having said that, there are always examples of friends running successful businesses. It is important to emphasize on the balance between business and friendship. Friends should always communicate in all matters, even if they feel that as friends, there can’t be a conflict between them. They should decide specific roles for themselves, see whether they compliment each other in the skills needed to run the business, and most importantly they should know when to switch on and off being friends and business partners.

What about me? Will I again start a business? Certainly YES 🙂 But will I start a business again with friends. I am not saying a complete NO here, but I will evaluate a lot more before jumping in this time. Some of the points where founding partners of any business needs to be aligned are –
• Do they share the same values and how do you expect them to play in day-to-day business activities?
• Do they share the same vision for the business?
• Are your work habits and work ethics in line to co-exist?
• How much money will you put into the business and how much do you expect to get out of it?
• What Roles will each of you play in the company? Who will be the CEO/Leader?
• What if one of you gets married and decide to move away?
• How will you treat your employees, customers, investors, etc?

There are certainly other question you need to ask apart from those listed above. But the most important question I would ask myself would be – Am I ready to accept the fact that this person might not be my friend in another couple of years? If the answer is NO, I will know what to do. In his book “The Greatness Guide”, Robin Sharma has rightly pointed out that at your funeral, you don’t see you business partners crying, it is your friends and family who will cry over your grave. A Point Well Made!!

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  1. I truely agree with u Sumit, u’v ponted almost everytthing in detail.

  2. I’m the person in the center of the pic and couldn’t resist to drop a comment as soon as I saw this. Dude you will go a long way, trust me you will. I don’t know whether i’ll be there as a business partner or not but as a friend it’s a 100% YES. The amount of learning and experience we gained together during sukip and saleraja was astounding. I’ll always remember that time.

  3. Whenever a friend has suggested we do business together, I have always been skeptic. Why? Because you could lose a friend. One person can’t fit all roles. It is better a friend remains a friend and not become a business partner. There are some businesses that complement each other which would be a better option with each friend performing a different role and reaping the fruits of that role. This is nearest one can get to doing business with a friend. Everything said and done, why should anyone make a compromise?