Do­ing busi­ness with a friend

The Philippine Star - - BUSINESS - FRAN­CIS J. KONG

Three friends went into busi­ness for them­selves. The first one said, “I put up 65 per­cent of the cap­i­tal, so I’m the pres­i­dent and chair­man of the board.”

“I put up 30 per­cent of the money,” said the sec­ond, “so I’m ap­point­ing my­self vice pres­i­dent, sec­re­tary, and trea­surer.”

“Well I put up five per­cent,” pointed out the third part­ner. “What does that make me?”

The chair­man said, “I’m ap­point­ing you vice pres­i­dent of mu­sic.”

“That sounds mighty fine,” said the third man, “but what does it mean?”

“It means that when I want your ad­vice, I’ll whis­tle.”

There is a say­ing that goes this way: “It is bet­ter to do busi­ness with a stranger and then be­come friends than to do busi­ness with friends and then end up as strangers.”

Many of my friends to­day are peo­ple I used to do busi­ness with a cou­ple of years ago. I have learned from them, and per­haps they have learned from me too. I still do some busi­nesses with them and the one im­por­tant thing I ad­here to is that friend­ship and re­la­tion­ships come first be­fore any­thing else.

Yes, it is bet­ter to do busi­ness with a stranger and be­come friends than to do busi­ness with friends (or rel­a­tives) and then end up as bit­ter en­e­mies in many court cases as well.

How fa­mil­iar the tales when the busi­ness was start­ing, the friends re­ally worked hard to make the busi­ness grow. They sac­ri­ficed and chan­neled their en­ergy to grow the en­ter­prise. But when the busi­ness grows, ex­pands and be­come fa­mous, with so many other peo­ple from the out­side of­fer­ing un­so­licited ad­vice and pro­vid­ing soft whis­pers, the re­la­tion­ship sours and friends be­come en­e­mies.

There is now mis­trust. There is com­pe­ti­tion. Busi­ness ethics and in­tegrity fly out the win­dow. Copy the data­base. Qui­etly and covertly es­tab­lish a con­flict­ing busi­ness. Pi­rate the ex­ist­ing per­son­nel by of­fer­ing them a higher pay. Se­cretly meet with sup­pli­ers and ven­dors, and then court the ex­ist­ing clien­tele be­cause war is de­clared!

Many busi­nesses start with friends, but how do you start a busi­ness with a friend and sus­tain the busi­ness over the years while re­main­ing as friends?

Start­ing a busi­ness with friends could just be as mean­ing­ful or toxic, and in my ex­pe­ri­ence it is so far from the fan­tasy of im­me­di­ately grow­ing the busi­ness, earn­ing bil­lions, be­ing in­ter­viewed in TV busi­ness talk shows as the grind and the grit have to be there deal­ing with the un­sa­vory nuances of start­ing a busi­ness.

Here are a few ideas that may help guide busi­ness star­tups of friends or rel­a­tives en­ter­ing into an en­ter­prise:


Never trust mem­ory. It fades and it changes over time. Have a third party present to serve as the cor­po­rate sec­re­tary and op­er­ate all meet­ings and trans­ac­tions pro­fes­sion­ally.


You and your part­ners may be bouncing ideas off each other all day, but your re­spon­si­bil­i­ties should be clearly out­lined so that you do not step on each other’s toes or over­lap each other’s func­tion. This only causes con­fu­sion not only to the part­ner­ship, but also to ev­ery­one work­ing with you.


You may think that all those ob­scene hours put to­gether in the en­ter­prise is more than enough time spent to­gether and you could be wrong. Busi­ness requires a high amount of at­ten­tion and adren­a­line, and con­flicts are part of busi­ness. Take time off and en­gage in other ac­tiv­i­ties and DO NOT DIS­CUSS BUSI­NESS when you do. Talk about other things and in­ter­ests, you used to have them and that is why you be­came friends didn’t you?


I would sug­gest that you do not see each other on week­ends. Take time for your­self. Soli­tude is very im­por­tant for one’s emo­tional, phys­i­cal and spir­i­tual health. You need a change of scenery and all be­cause that old cliché rings true – fa­mil­iar­ity breeds… you know the word that comes next.


When friends work to­gether, when fam­ily mem­bers are in­volved, the volatil­ity of emo­tional out­bursts is al­ways higher than strangers who know how to re­strain them­selves prop­erly. Con­flicts will al­ways be part of any busi­ness, so learn how to han­dle con­flicts in a pro­fes­sional way with­out putting so many per­sonal drama and emo­tional at­tach­ments into it.

There are so many other ideas and this col­umn does not pro­vide ad­e­quate space for them, but the gist is that at the end of the day, re­la­tion­ships should pre­vail over gains and in­ter­ests.

I have al­ways been will­ing to “lose” my side of the profit equa­tion, but would never be will­ing to com­pro­mise on break­ing the friend­ship be­cause the prospect of mak­ing money in the fu­ture will al­ways be there. But I would be so care­ful not to com­pro­mise on ethics and pro­pri­ety so as not to be ac­cused of gain­ing un­due ad­van­tage at the price of a part­ner’s loss. And maybe this is why I still have them as friends over the years and the trust fac­tor is as high as ever.

Here’s the deal. After all is said and done, money is still the acid test of char­ac­ter. The foun­da­tion of do­ing busi­ness with last­ing friend­ship is built on the char­ac­ter of the part­ners and not just their skills. Build on the char­ac­ter as well as the busi­ness as this will be more prof­itable in the long run.

(Ex­pe­ri­ence two in­spir­ing days of lead­er­ship train­ing with Fran­cis Kong in his highly ac­claimed Level Up Lead­er­ship on May 17-18 at the Shangri-La Ho­tel Makati. For reg­is­tra­tion or in­quiries contact April at +63928-559-1798)

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