Can friends be business partners

Have you ever sold a car to a family member?

very interesting

Sounds like she's sales, your everything else.

So pay her a 50% commission on anything she brings to you.

I started a business with a stranger. I brought in my best friend of 20 years. He screwed us. I'm still friends with the guy I started the business with.

Rocky Rhode wrote in post #13063953
Thanks in advance for any advice, comments, and/or questions that you can provide me with to help.

Personally I would say go for it, but before making a move sit down and draw up a plan, a contract in writing with the advice of counsel, defining each parties responsibilities and more importantly providing an exit plan which clearly divides up any remaining assets and defines who is responsible for any liabilities should things not work out.

I would advise incorporating to shield either of you from personal liability should something really go south.

And also never forget you will always have a third partner who will demand their (substantial) share of your profits without excuse, that partner being the IRS.

Wayne

FeXL wrote in post #13063997
Business partnerships with friends usually end up in shambles. There are some that survive, but very few.

A business seminar I attended years ago specifically recommended against it.

I have done it, and I cannot get the right size font to say DO NOT move ahead with a friend as a partner.

But, if you must, then engage an attorney up-front, split the $2,500 fee, and create a Shareholder's Agreement which is lock-tight as you jointly form a legal entity to operate the business.

Here is the list of things you must consider, and if you do not, I assure you things can go very badly:

1. Death, disability or departure, voluntary or involuntary, of either party
2. Up-front cash capital contributions
3. NON 50/50 ownership
4. Vesting schedule for stock, tied to actual events such as (a) sales (b) performance of specific duties; doesn't happen, no equity

Your instinct will be to ignore this advice.

Your rationale will sound like "We are friends, we trust each other, nothing will go wrong, s/he has got my back" -- and you are wrong.

In an effort to help you, let me put on display the progression from friend to 'partner' so that you're very clear on how this goes awry.
1. All good
2. Partner takes too much time / fails to perform / punts, even if it is because of an 'emergency'
3. Partner takes money off the table even though (2) happened because, hey, s/he is your friend
4. Partner is forced to spend no time on the business; probably due to family obligations, or side work for cash which you do not know about
5. Partner takes money to help with family expenses which, in her/his mind is the right thing to do, and assumes you will understand because, hey, you are a friend
6. Partner does nothing, then wants 50% of the profit from work you alone executed
7. Partner just 'could not get that done' because of 'whatever' leaving you working all night because the client expected it by tomorrow
8. Partner stops answering the phone / walks away / wants money to leave
9. Engage attorneys

S.Horton wrote in post #13070537
I have done it, and I cannot get the right size font to say DO NOT move ahead with a friend as a partner.

But, if you must, then engage an attorney up-front, split the $2,500 fee, and create a Shareholder's Agreement which is lock-tight as you jointly form a legal entity to operate the business.

Here is the list of things you must consider, and if you do not, I assure you things can go very badly:

1. Death, disability or departure, voluntary or involuntary, of either party
2. Up-front cash capital contributions
3. NON 50/50 ownership
4. Vesting schedule for stock, tied to actual events such as (a) sales (b) performance of specific duties; doesn't happen, no equity

Your instinct will be to ignore this advice.

Your rationale will sound like "We are friends, we trust each other, nothing will go wrong, s/he has got my back" -- and you are wrong.

THIS!!!

I would ask "what is the advantage of having a partnership as opposed to separate businesses that would work in concert with each other?".

^^ Coverage for each other, cash contribution to fund the business.

As for the sales and marketing plan, that is unsound as I read it. Better to have the partner start calling other parent s/he is already well-connected to. And if that person has no sales experience, it is likely not to work.

windpig wrote in post #13070555
I would ask "what is the advantage of having a partnership as opposed to separate businesses that would work in concert with each other?".

This is a VERY strong consideration; separate our business's while working together so long as we are mutually benefited. Should things go south; no harm, no foul.

Thank you for suggesting it.

Wanted to follow up with the meeting that my friend and I had this past weekend; I copied and pasted many of the thoughts that you all shared to give us a baseline for discussion.

I am very glad that I brought this topic to POTN as a plethora of insight was put forward that I had not considered; we came out of the discussion in total agreement that we would pursue our endeavors individually and help each other as much as necessary so long as it is convenient.

I told her that our friendship was the most important aspect, and did not want this to end up causing a rift.

Again; thanks, topic closed on my end

Excellent choice.

Very wise.