Should I partner with my close friend to start a new business?

[hdsilver]

Hello folks,

I am from Vietnam and I am thinking starting my own business with my closest friend.

What I have been concerned recently is our friendship.

I have know him for more than 10 years and we have been good friends since then.

But when it comes to business/money, conflicts will happen for sure and it is usually said that friendship will easily be broken. The thing is that I don't want to start business alone, but I don't want to break our friendship in the long run.

So has anybody here experienced that kind of problems? How did you guys manage it?

Do you have any advices for me with this issues?

Any ideas is highly appreciated.

Thank you friends ^^

[ronrule]

Don't do it. A company only needs one chief, and when people approach a business with a 50/50 mindset, eventually there will be a disagreement and often they tear the company part. Eighty percent of partnerships fail, friends or not.

I wrote an article about last month which touched on partnerships and their downfalls: Ideas are a Dime a Dozen

[hdsilver]

Hi Ronrule,

Thanks for reply.

Actually I am now 21, pretty young and I need 15,000USD for a franchise business, which is relatively a big sum for a Vietnamese person.

The business idea was originally mine and I am confident that I can do it alone. The only annoying thing is that I don't have enough capital. I don't want to borrow from bank, as this is the peak interest bank loan period in Vietnam right now. So I must cooperate with friends.

Do you have any other ideas to manage this problem?

Thanks

[ronrule]

If you truly believe in your concept and ability to execute it, $15,000 is a small price to pay for retaining 100% ownership... you don't believe that you would be able to make that amount + interest within the term of the loan? Even with Vietnam's high interest rates (which I think are around 12% now, right?) that's still only $1,800 per year for the credit.

I know things are different there economically than here in the states, but the business process is the same world-wide... if you aren't confident you can make enough to cover the cost of the loan, then you also wouldn't be able to make enough to cover your partner's investment. And if he's the only one putting in the money, he should be the majority owner - which would make it easy for him to cut you out of the picture later if the business is only making enough to support one of you. I know that no one ever thinks their friends will do this to them, but I've seen it happen when things go south.

[sharestall]

If you ever go into business with a close friend, family, always make sure you have everything in writing still. Often that gets neglected because of 'trust' and the closeness of the relationship. Thus when something goes wrong, it makes it hard when agreements aren't down in writing.