Doing Business With Friends: a Primer

You Shouldn't Do It, but If You Insist...

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Marc Brownstein Marc Brownstein
It's an old adage that you simply should not do business with friends. That is, as long as you value the friendships. For the most part, I practice that. In fact, I wouldn't WANT to do business with most of my friends. I love them. But they'd be a pain in the...

There are the occasional exceptions, however. And about two years ago, I took a dip into those murky friendship waters. I took on the public relations/interactive business from a couple that is very close to my wife and me.

There are many ways to describe the working relationship. A few that come to mind: inspiring; volatile; honest; unprofitable; and dotted with mismanaged expectations.

We do great work for them, and they sing our praises to my team and in the community. But there are issues that come up over time, and dealing with them requires a different approach than with a typical client.

For instance, while these special friends deserved the same level of thinking that our largest clients do, they hired a marketing director that had our agency in his cross hairs from day one. So the relationship fired on all cylinders when we worked directly with my friends. But things misfired when the marketing director got in the way. That required a sit-down with the husband and wife to give them some transparency on what was happening. That would be harder to do in a more formal client relationship. Something like that could get the agency fired. Chalk one up in the advantage column for doing business with friends.

On balance, getting paid on time has been a challenge. My finance department constantly reminds me that their receivables are many months late. I respond internally that there's no need to worry about payment. And I believe that. But would I permit other clients to pay on such loose terms? Chalk one up in the disadvantage column for doing business with friends.

There are many highs and lows to doing business with friends. It's a very slippery slope. So my advice is to set some ground rules at the outset of the relationship. Insist on open lines of communication. Be blunt. Always give your friends the benefit of the doubt. They eventually come through -- not every time, but you have to give them the chance to do so. Discuss sensitive issues in person, not by email. There's too much risk for misinterpretation.

And, last: Don't do business with most of your friends. It usually doesn't work out. Unless he/she is waving a multi-million dollar account in front of you, it's usually not worth the risk. I'm fortunate that I still maintain a close relationship with these friends, due in large part to deep, mutual respect and applying the lessons learned that I just outlined.

Have you done business with friends? How has it worked out? Were they clients first, then friends? Or the other way around? Let's exchange best practices.
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