Starting up a business with your best friend.

[Sun Wukong]

I have a friend I have known since I was 3 years old, have got up to plenty of mischief and adventures with over the years, and generally consider him to be like a brother to me. I have also inherited his family over the years, and his house has been like a second home to me (especially in difficult times).

I have been travelling about for the past 5-10 years, and so have seen a lot less of him, but whenever I am back we spend time together very happily. We have had our disagreements and arguments, but have had each other’s backs over many scrapes.

I am at a bit of a cross roads in my life, or rather, I’m not far from 30 and still have no career direction or thing that grabs me. I had been starting to miss England and want to head back anyway, but was very concerned about what my (limited) skill set would get me, and what I would do on arrival.

Last time I was back, he really came through for me with some problems I was having, and he also introduced me to a business plan he had. He had a business partner lined up, but she has since been busy with other stuff. His business idea (I can’t say much, as he asked me not to, but it’s not pyramid selling, suffice to say) is actually very interesting, and has the potentially to be a lifetime rewarding career, not to mention something with environmental and humanitarian impact. I am actually pretty excited about it, and further down the line I should be able to implement my degree (biology based) to add my own touches to it.

He has said he doesn’t want to do it alone, and he has few people he’d trust it with, but he would love to do it with me. He has a large collection of support set up for taking care of things we can’t do (websites etc), plus rent free space to start off in with his stepfather (who has a lot of business acumen and can help us). We are both reaching the same period in our life at the same time; stopping the drinking and partying, both happily single for once, and both intelligent people struggling to find inspiration to apply ourselves to.

It sounds perfect. He is also happy to give me the 6 months – a year I need tying up some loose ends, and he also has some stuff to do. He already has a working model, and we can upscale from that hopefully.

There are some negatives though, or at least things that make me hesitate.

Firstly, this is clearly his baby, and I am worried if I am not fully committed to it we could damage the friendship. That said, it may be a long time before we see returns, and upscaling it to viable levels is going to require all profits go straight back in to the business. So I’ll be working two jobs essentially, perhaps without any return (except paying him back for the years of kindness he has shown me, which is no small thing).

Secondly, this whole idea is his, all the technical knowledge is his, the business plan is his… pretty much everything. I might be able to add a different opinion of some things, and generally put in a lot of work, but how would you guys recommend we split the business? If I am toiling for 2 years to turn it in something good, I’d like a fair return. But it’s obvious all his intellectual property, contacts and generally I’m just going to be lugging stuff around. I was thinking 30:70, but even that seems high. Don’t want to kick myself in 10 years time if it does work out, but also don’t want to pretend my part is bigger than it is.

Thirdly, I am starting to get worried about starting my life. I know it hits everybody, and this is as good a place as any to start (especially if I can do the same day job as he does, which is actually something I’d find very interesting – engineering based – and have enjoyed a few times as part time work, and could see a career in itself), but I am worried I will be unrealistic about how long it will take to get off the ground. I am bargaining on 2 years, but I talked to him this morning and he seemed to think it would be in the region of 5 plus. I don’t have any burning desires to do anything else right now, and I have a backup plan that I can start anywhere to the age of 35 I’d guess, so I have years on my side. But the itchy feet could really put strain on me, us and the business.

Also, whilst I love the idea, I am not so sure I love the business model. Again, it is his baby, and I have no experience with business… but neither does he really. There seems to be a couple of worrying sides to it that he hasn’t really considered, or is hoping will sort themselves out, and that could cause a problem in future.

Lastly, it is basically going to be in my home town. It is good in a way, as I still have lots of friends in the area, plus my aging grandparents who I have missed dearly on my travels, but I also have quite a few ghosts there, and would rather a fresh start. We’d be looking to set up larger operations in the future anyway, but that may add to the “itchy feet” issue, feeling like I couldn’t get too set up in the first place for fear of having to move (or worse, being reluctant to move after getting comfortable when the time comes).

On the plus side though, it’s the first time I’ve been excited by the idea of coming back to England since the recession started, and having recently been smacked round the face with the self-aware stick, it’s a really good chance to work with a good friend doing something to better ourselves.

Just thinking out loud really here, and keen to hear any stories you have from start-ups, going in to business with friends, and just general opinions.

[Pete.]

Sounds like a bottomless pit of pain to me. I wouldn't touch it with two bargepoles sellotaped together.
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a.k.a 'Geri'

132.9mph off and walked away. Gear is good, gear is good, gear is very very good

[CaNsA]

[Rogerborg]

[wr6133]

[Pete.]

[N cee thirty]

watch The Social Network and then think again whether or not if you wanna work with a friend.
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'00 Aprilia RS50 > '92 Honda CG > '99 Yamaha Fazer > '91 Yamaha RXS > '79 Suzuki X5 > 01' Honda Cg > 07' Honda Cg > 82' Kawasaki Z200 > suzuki gsxr 400 gk73a > honda vfr 400 NC30 Mod 2 Passed 09/06/2011

Jewlio Iglesias wrote: I actually did vote BNP once

[Raffles]

Partnerships often end in tears. You'll possibly lose a ton of money and you'll probably also lose your friend.
Don't do it.
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A good loser will always be a loser.

[hellkat]

I'm at work and (as usual) skipping over everything, in the hope of reading it properly later.

But I just want you to know that if you choose to go ahead with this (cos maybe it will bring you some peace of mind that I can see you desperately need) - you can of course expect my support and my (as usual) brutal honesty about anything you come to me about, knowing that I always have your best interests in mind.

When you are in business with a friend, you can no longer expect them to give you that same deal, as the boundaries become different.

This is what you need to remember.
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Not nearly as interesting in real life.

[hellkat]

Also (before I skip off to do some real work) ...

If you take this up, the family issues you have been wrangling with MUST take a back seat. On another bus, preferably, heading in the opposite direction.

You will have to walk away from that and let it run its own course (I think you should do that *anyway*, as it goes) but in the case of start-up businesses, you should put everything you have into the business and not be distracted by old history.
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Not nearly as interesting in real life.

[panrider_uk]

On the other hand...

I have done this twice with different friends and when the business partnerships dissolved we remained friends.

Not everyone is out to stab you in the back.
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Current bikes: Honda ST1100 Pan European. Moto Guzzi V85 TT Travel

[Benjums]

Best thing to do is to both sit down and be brutally honest with each other from the start. Point out where you think the holes are and how you can help put things right. Also I can see what you mean with it being his brainchild and you don't want to take the piss percentage wise, but you do have to look out for yourself a bit. I would aim for closer to 50% as you can. Or start at 35% raising to 50% over a few years. But as I said before you both need to be honest with each other not only now but all the way through the partnership.

[Sun Wukong]

Thanks for the replies, appreciating the blunt honest *sniff*

To be honest, he just seems like someone lacking the motivation to really get it going on his own, and just wants someone supporting him. It's not a get rich quick scheme, and it's mostly his money in it.

Infact, I am the one saying we should both put in money if we expect investors further down the line.

Looking back on the money I lost on my last relationship in the course of trying to make that work, and everyone is still telling me I should be weilding boom boxes outside her house of a morning, I can't see how risking a couple of grand and some time helping a friend get his dream off the ground is that big a deal.

I should point out, I have no house to remortgage, no dependents, and a fairly bohemian lifestyle at best anyway. I will probably be working full-time to part-time (on another job), and saving pretty savagely (as I always do, so it's not arduous... and now being next to teetotal it should be a doddle), so any time I choose to leave it shouldn't mean financial ruin. And like I say, I have a onwards plan I can start right away, or delay for a year or two. Going straight away or delaying both have about equal advantages and disadvantages as far as I can see, so it genuinely isn't that big a worry.

Still pondering it... More that I tend to jump in to big commitments without the requisite thought, and this time want to change that cycle. He is aware I'm giving it thought, and is happy for me to continue doing it. I kind of miss being involved in his wacky adventures, and to be honest, just being part of a mates dream as a hobby wouldn't be the worst thing.

Abject failure or total success, I can handle. What worries me, and I've already said to him, is it grinding along barely covering costs (despite sapping my time and energy) for several years, and the inevitable "You can't leave now, I can feel something big is coming," with Murphies Law saying I'll have regrets which ever way I choose. This is what worries me, and without a concrete enough plan to set concrete red flags and walking dates, I could get trapped in the business equivalent of a loveless marriage.

But in terms of his intentions towards me, he is one of the few people I do trust implicitly, and he does love me like a brother (gaaaaaaaaaaaay )

Regarding family, I have already said it is on the privoso the whole lot of them are kept out of it, and I will probably include spending Christmas with his family rather than mine. Harsh, but necessary about this time. None of the developments since we last spoke will surprise you in the least, but at least if I keep it quiet the buggers should have pissed off up north by the time I go back. The closest I got to an apology was "we have a difference of opinions." Good Christmas eve laugh that was, genuinely cheered me up no end after a crappy day.

What worries me is that this will not really develop in to a business relationship, but more just kind of mates tinkering in a shed talking about future gold plated hippoes they will fill their private island with. I'm not expecting to get rich, but I'm expecting the bugger to move. Hence why I quite specifically asked about times to get off the ground and what you'd think is reasonable (obvious being this vague it's hard to answer, but general start up time frames etc).

Also, I haven't spent much time with him lately to know his business personality now, but it didn't used to be great back in the day (but we are talking nearly 10 years ago when I used to be involved occasionally with it). I have this nightmare of being the terrible dragon's dens entrepeneurs. Again though, I could be being overly harsh, and he does know this subject upside down and back to front, and has had a day job directly related to it for a few years. But that is also a concern; which is a bit personal to hit him over the head with while already questioning enough other stuff.

Ack, it just ticks a lot of boxes, and we'd be looking for an actual business partner as soon as possible to guide the growth, he just really needs someone to help him get it off the ground and motivate him I guess.

I appreciate the discussion on percentages. I like the 30% rising to 50%, but it still doesn't feel right somehow. I suppose we could say 50% when I'm actually adding to the innovation of the company, but still feels a bit miserly somehow.

But this is also why I have no interest in business as a general concept, I just would like to help him in this particular business. Watching The Apprentice makes my skin crawl, actually.

Like I say, there is no rush on a decision, and I have some very quiet months ahead to figure it out. Again, just trying to sound out people's feelings while I can.

[swampy]

I'd think hard if you really need the hassle, as I would guess friendships can be lost on the slightest disagreement when money is involved...
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"I hate to advocate drugs, alcohol, violence or insanity to anyone, but they've always worked for me." Hunter S Thompson
"Faster, faster, faster, until the thrill of speed overcomes the fear of death..." Hunter S Thompson

[nickyboy4]

Partnership is the worst ship you can sail in, i became partners with my best friend and we battled about everything-even a twenty quid top up of the van we bought, it was a never ending rollercoater of bitching, don't do it!

[Annabella]

[hellkat]

You could start by reading St3v3's thread which, whilst maybe not exactly what you are considering, is at least a consideration of "what if" and "you'll never do it" etc - and yet against [whatever], they've started it up and now they are moving forward with it. A bunch of friends doing something together. God only knows how it will all work out, but they are up and doing it.

Whether they end up grinding for nowt, or whether they end up snorting coke off whore's arsecracks, there may be similar experiences you can relate to.

Might be some insight there, might not.
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Not nearly as interesting in real life.

[Sun Wukong]

[Sun Wukong]

How about just helping them start it up?

Treating it as a hobbie with a friend, and waiting until the business plan takes shape before actually getting mired in the business side of things?

Seems a bit self defeating to get stuck in to arguments on percentages before even getting to look at the beast.

Plus during start up I don't believe we are going to be able push a great deal. The equipment costs are prohibitive, and we have to wait for that to build.

I have other reasons for wanting/needing to spend some time in the UK, so it could just be nice to help him initially, and if it takes off, then I can perhaps start to get more serious about it as a viable business, rather than just supporting a friend with his dream.

[st3v3]

Jen.... "Whether they end up grinding for nowt, or whether they end up snorting coke off whore's arsecracks"

Made my day. *checks watch*

I would say having roped a friend in who was by my side since we were 2, and always took the lead getting us into trouble; but is no longer part of the business or indeed my social life? Do it if you think it will work, when it's going good it is *great* but when it goes unsure? bad seeds are planted.
How someone reacts in support is one thing, how someone reacts once money talks is entirely different.
I lost a mate, brother and business had an impact on that. we haven't spoke in around 4 months and until this, spoke daily wherever either one was in the country.

If you think the absolute worst points of business can be worked through, times when money is almost non existent and you share the enthusiasm still then go for it, but if you value your relationship above everything it would be worth helping, maybe even having a minority share as management of the firm/project but partnership? No, because it's his ultimate thing and you'd let him push boundaries on the basis that "hes a mate" and in business neither of you can afford that.

Business isn't about how you run something, sole or jointly, it's about how your operating ethic sells what you offer and if that isn't 'good' between you, people wont touch.
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Roger wrote: Women don't get damp for clingy puppies. Get some better happy pills, hit the gym & buy a medallion the size of a dinner plate. Job done

[Sun Wukong]

[stinkwheel]

Set it up right so if there is a falling out or it goes under, liabilities and ownership rights are clear.

So, while I'm no expert in business. Assuming you are in the UK. Set up a limited liability company (that means the company is responsible for its debts if it fails, not the directors personally).

Issue shares in the company in proportion to each persons investment in the company.
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“Rule one: Always stick around for one more drink. That's when things happen. That's when you find out everything you want to know.”
I did the 2010 Round Britain Rally on my 350 Bullet. 89 landmarks, 3 months, 9,500 miles.

[st3v3]

[Robby]

The humanitarian aid sector is growing, and the UK is good at it. People are making a lot of money out of it with clever inventions, initially by selling their product to the UK govt to be used in international aid, and now by selling direct to government in developing nations that want the products, but don't want the conditions that are often attached to aid donations.

If you have a decent product, expect to sell the IP and rights to a larger company. If you have a range of decent products and a good chance of having more bright ideas, expect the company to be bought out by a larger company.

If you go for it, make sure you own some of the company. If you have a product you want to demonstrate to a potential buyer in a few years time, I will have some contacts.

[Marmalade]

It's likely not worth it, it's rare to find someone that can really be trusted not to fuck you over, think they did everything and owed every penny. Let him get on with it.
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