A friend and I are looking at starting a clothing business together. He is creative, while I am quite good at the business and finance side. One thing that had crossed my mind was the difficulties that might arise from starting a business with a friend. What would be your advice for anybody looking to start a business with friends or relatives?
Plenty of friends have run successful businesses but the key is to make sure you're separating
business from pleasure and not letting your personal relationship get in the way of your
professional goals. I think it's good that you have different backgrounds, so long as you play to your strengths.
Starting a business is difficult and it can put a strain on any relationship, so be smart. Create a plan, stick to it and maintain an open line of communication. Also, set expectations and make sure that you actually have the same goals for the business. The passion and dedication from each person has to be equal. I've seen many partnerships go sour because one person was swept up in an entrepreneurial "phase" and decided to have a crack and the other one was depending on the business's success to put food on the table. Not having the same expectations for the business from the start can spell disaster down the track, so make sure you're on the same page.
Contracts and agreements made between friends can be awkward but they are vital. Be explicit and have an agreed definition of success and failure. Similarly, have a clear discussion about the "exit strategy" in the event that one partner wants or needs to get out of the business unexpectedly. When you go into a partnership, you have to consider that things might not work out as anticipated and you need to protect yourself.
Start-ups always have unforseen setbacks which can take their toll on the owners. But if you have a solid business plan and a good understanding of the commitment needed to make the business work, you should be just fine. Good luck.
I have run my own business for almost 20 years. In that time I have seen many changes come through the business world and I believe my success is attributable to my ability to adapt my business to the consumer's desire. With that in mind I have seen the rise of social media and am adamant that it is important in order for my business to move forward. I have created a Facebook page and a Twitter account but I have been unable to truly engage with them. I do not know if this is a generational thing but I simply cannot garner much interest. I want to learn, I know I must, but I don't know how. What can you recommend?
I don't think it's a generational thing - I recently joined Twitter and I think it's a great way to talk to people about my business and increase exposure for what my company is trying to accomplish in the financial services space. The key to getting followers on social media is fairly simple - you have to have something to say that is of value to your audience. I don't know what kind of business you operate, but you are an expert and you have something to teach. Whether you own a bicycle shop or you have an accounting practice, you have knowledge that others don't. So use it! Social media shouldn't just be about opinions and idle chatter, there is actually plenty of room to create meaningful content. One thing I recommend is to follow all the news sources that publish relevant stories about what you do - it's a good way to start sharing information with your social media network and it will help you get into the swing of things and better understand how it all works. There are plenty of "how-to" guides on the internet but I think the key is just getting familiar with it and then creating a network that has genuine value.
Mark Bouris is the executive chairman of Yellow Brick Road,
a wealth-management company and small business adviser that sells products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax. His advice here is intended as guidance only.
Mark Bouris will be hosting his Secrets to Business Success seminar on May 30. For details, go to ybr.com.au.
If you have a question for Mark Bouris, email it to Max Mason at max.mason@fairfaxmedia.com.au.
Frequently Asked Questions about this Article…
Is it a good idea to start a business with a friend or relative?
Yes — many friends run successful businesses together, but you must separate business from pleasure. Play to each other's strengths, create a clear plan, keep communication open and set expectations up front so your personal relationship doesn't get in the way of your professional goals.
How can I protect my friendship when forming a business partnership?
Be explicit about roles, responsibilities and goals from the start. Use written contracts and agreements, define what success and failure look like, and agree an exit strategy so everyone knows what happens if someone needs to leave unexpectedly.
What kinds of agreements should friends put in place before starting a business together?
The article recommends clear contracts that cover roles, an agreed definition of success and failure, and an exit strategy. These documents help protect each partner and make sure everyone understands commitments and consequences if things don’t go to plan.
How important is it that partners have the same goals and commitment level?
Extremely important. Partnerships often fail when one person treats it like a passion project and the other depends on the business for income. Make sure passion, dedication and expectations are aligned from day one.
How should small businesses prepare for unforeseen setbacks?
Expect setbacks and plan for them: build a solid business plan, understand the level of commitment required, and create contingencies. A realistic plan and mutual commitment increase your chances of weathering early difficulties.
How can I use social media to boost my small business or attract customers?
Focus on providing real value rather than idle chatter. Create profiles (Facebook, Twitter), follow relevant news sources, share useful industry information and how-to content, and build a network that offers genuine value to your audience.
What should I post on social media to gain followers for my business?
Share knowledge you have as an expert — tips, relevant news, helpful how-to guides and curated industry stories. Consistent, valuable content helps you engage followers and get comfortable using social platforms.
Who is Mark Bouris and where can I find more advice or ask a question?
Mark Bouris is the executive chairman of Yellow Brick Road, a wealth‑management company that offers services like home loans, financial planning, insurance, superannuation and investments. He was hosting a 'Secrets to Business Success' seminar on May 30 (see ybr.com.au for details) and questions for him can be emailed to Max Mason at max.mason@fairfaxmedia.com.au. His comments in the article are intended as guidance only.
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