Can friendship survive in a business partnership?

Planning to start a business partnership with a friend? Prudence demands looking at the pitfalls – as well as the potential strengths – of such relationships. Here are a few questions to consider.

* What will my friend contribute to the business? Does he or she have strengths that will clearly enhance the business – abilities, knowledge, or resources that you don’t possess or aren’t willing to acquire by other means? Say, for example, you’re a crackerjack salesman, but not too good with numbers. If your friend loves details and is clever with records, the partnership may make sense. If, on the other hand, your pal really can’t offer something that would round out the business or make it more profitable, you might want to consider partnering with someone else. Or you might consider just hiring the talent you need.

* Are you willing to lose the friendship? This is a tough question, but one that’s critical to consider. After all, you and your friend will be working together, day in and day out, to make the business succeed. Such relationships can bring out the best – and worst – in people. If maintaining your friendship is one of your highest priorities, partnering with someone else may be a better choice.

* What’s expected from each partner? Developing a profitable business is hard and often unrewarding work. You and any potential business partner should honestly discuss expected work hours, contributions, and responsibilities. Resentment can creep into any business relationship when partners feel that workloads and rewards aren’t fairly distributed.

* Can you communicate effectively? Like a good marriage, a long-term business partnership takes honest communication to succeed. Ask yourself, for example, whether you can handle constructive criticism from your friend/business partner. Even the closest business partners don’t always see eye to eye, so it’s important to take an honest look at how you both handle disagreements. Will you work through difficulties for the firm’s sake, or bury your head in the sand and hope for the best? Answering this question is crucial to the success of your partnership.

Friends can be great business partners, but it’s wise to proceed with caution. If you’d like help assessing potential business partnerships, give us a call.

About Brenda J. McGivern, CPA

Brenda McGivern started her own certified public accounting and management consulting firm in October 2001. The full service CPA firm provides tax and accounting solutions to meet the needs of today's small business and individual. Brenda McGivern has become a trusted advisor and valuable resource her clients rely on for timely, accurate assistance when they need it. Before starting the firm, she worked as an accountant for three years at a local firm and prior to that five years at a large international CPA firm in Boston. She has performed the following tax services: federal, state and local tax planning, international tax planning, estate and succession planning, mergers and acquisitions, capital retention and IRS representation. She has also coordinated assurance engagements, such as financial statement audits, reviews and compilations from the planning phase through the reporting phase. She has prepared and reviewed regulatory filings for numerous regulatory agencies including the Security and Exchange Commission. Prior to these positions she was selected from over 2,000 candidates into an eight-person intensive financial management program at an international technology company. The program consisted of graduate level classroom study and two six-month rotational assignments in financial operations. She graduated cum laude from the University of Massachusetts at Amherst and holds a Bachelors Degree in Business Administration with a concentration in accounting. McGivern also holds a license in Massachusetts as a Certified Public Accountant and is a member of the American Society of Certified Public Accountants and the Massachusetts Society of Certified Public Accountants. She resides in Stoughton, Massachusetts with her husband Brian, and their sons Sean, Ryan and Conor and their dog, Davis.
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