10 Ways to Make Business With Friends and Family Work Out

One of the many reasons business partnerships fail is unmet expectations. Be it contractual obligations, delays or bad decision making, communicating what the needs, requirements and nice to haves are essential to ensuring success. A contract can be broken and money can disapear down black holes; litigation can end up giving you undesirable outcomes. As investors, we need to shoot for the win-win and as partners, we have to go beyond compromise. Happy business partners remain friends and family forver, and can actual result in building your own mini-empire.

These are 10 ways to achieve optimal results:

1. Do your research.

Shop around for services before starting the endeavor to have a clear understanding of where your costs can skyrocket. Know the who, what, and where. DON’T rely on the word of those asking you to partner up alone. If it is making you uncomfortable, politely decline and look for a more manageable investment of your time, money and effort.

2. Document, document, document

Write down the requirements, the plan, the action items, the questions, the requests, the discussions, the decisions and the risk items. Build an iron clad contract that is enforceable in the location and state you live in and/or are doing business. Be very precise with items you are inflexible. Be up front, include a penalty section, and obtain the necessary permits, approvals and licenses before proceeding.

3. Plan for Murphy.

Think about everything that can go wrong and will go wrong and prepare a robust mitigation plan. Leave a 10% budget cushion to account for last minute changes and emergencies. Assume that what can go wrong will go wrong. Prepare yourself mentally for those moments. Have a Plan A, B and C. Being proactive and not reactive is invaluable and accomplishes more than reacting and melting down. If you can’t see past a Plan C, you will be in trouble especially if you are facing delays and funds are running low.

4. Don’t spend more money that you can’t afford to lose.

Cutting corners never works out because maintenance and repair costs will eat up your budget. Get the best equipment at the right time for the lowest price possible. Don’t go super cheap unless the expectation is that the work or item will only last for a short time. Start small and then venture on to greater challenges and risk opportunities. Going in over your head will kill the project fast.

5. Delegate, with caution.

Retain control over the deliverables that matter to you. If you don’t have the experience, factor in the cost to delegate to a professional in case things go south. Don’t trust the work to anyone that you haven’t vetted thoroughly. Check reviews on Yelp or Angie’s List (to name a few) before hiring expert help. Make sure they have their credentials up to date and their bond/insurance up to par with the job being done.

6. Don’t take on more than you can chew.

The inverse to #5 applies as well: Don’t take on too much either. It will cost you even more long term to fix a problem caused by your inexperience. Evaluate what your capabilities and bandwidth are before accepting extra work. Know your limits and your stretch areas. If you feel overwhelmed take a step back and ask your partner or experts for help or guidance. Outsource or delegate with caution.

7. Hire the right professionals to audit contracts, plans and books.

Once the project starts find reputable sources to audit or check the progress of your endeavor. Look for non-advocates or people not associated with the project to validate the schedule, risks, plans and completed tasks. Ask for as many opinions as you need but understand that some aspects can be open to interpretation while others aren’t. Three to five opinions or assessments should be more than enough to give you reassurance or confirm what you were suspecting.  Pay taxes and fees on time. The IRS will find you and shut your enterprise down.

8. Learn to say NO.

Don’t taking on more than you can chew requires that you also learn to say no and to respect your own boundaries. Throwing more money into a problem may not make it go away. Analyze the situation and if you are uncomfortable with a request or decision speak up and get the consensus or results in writing, signed and witnessed, if necessary. Stick to your convictions and time tables. Avoid justifying your answer; No is a complete sentence.

9. Cultivate both the personal relationship(s) and the business partnership (s).

Many people make the mistake of mixing business with pleasure. Business is business. Pleasure should be pleasure. Without a clear distinction and/or boundaries the partnership or project will fail. In the end, the relationship that brought you to work together should not become strained. Air out grievances in the correcr environments. Don’t ruin a moment by holding on to petty details. Look for the intrinsic and extrinsic motivators of all those involved to find common ground where negotiations can prosper and ideas can be thoroughly discussed. Work with people, not around them. Even in dire times, please keep it civil.

10. Have fun!

Keep things humming along at construction sites by allowing ways to de stress  (like basketball hoops or other sports equipment  suitable for breaks) while enforcing safety standards. Approach difficult situations with tact and humor. Celebrate the completion of milestones and the victories over adversity. An engaged work team and an open environment will make wonders for morale and project closure. Vested and happy people make miracles happen faster than grumpy ones. 😎

If things go wrong don’t lose hope and don’t dispair. Work hard for success. Find multiple solutions to problems. Don’t just dream about success, secure it by enlisting the right resources. Know when to yield, when to fight and when to let go. There is more than one way to skin a cat…and your way may be the least ideal. Always keep your flexibility and a clear head when working out the differences. If you still fail, at least you will have gained valuable and sound experience; share your journey so that others may benefit.

¡Éxito!

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