[Dark Romantic]

I'm going to post this in the general advice section later, but first off, I thought I'd see what kind of responses I'd be likely to get over here.

So, just recently, a friend and I decided we're going into business together: his dad's got a lot of money, owns a warehousing business, and we've decided to take advantage of that, and start selling directly to customers. So far, so good: I figure this is as good a time as any to gain some (legal) business experience, I've got a million ideas as to where I want to take this thing, and my situation right now demands that I begin making some real money. Plus, this guy and his dad are likely to be very good connections down the line, so if nothing else, it's a good networking opportunity.

HOWEVER... there are a few pitfalls I'm seeing right off the bat, that I'd like to avoid.

1. This guy has control over all the important resources.How soon until he realizes he can do it on his own? It'll be more work, of course, but he'd stand to make twice as much, and it's certainly what I would have done to begin with. At the moment, I want to secure my position before that becomes an issue: so far, I've been doing that by spreading the word among people I know, but this honestly just seems like an inefficient strategy. Does anyone have any other ideas?

2. This is my first (legal) business venture, so, what are the technical details I'd have to keep an eye out for? I'm talking in terms of legal issues, setting up methods of payment, shipping, and all the other boring details I'm going to be handling (Those familiar with Canadian law should answer this, though anyone else is welcome, of course)

3. Conventional wisdom says it's a bad idea to go into business with a friend. How would this affect future business opportunities?

4. Any general advice would be appreciated, as well as anything else I missed.

I should also add that #1 isn't likely to be a problem right now, since I've got a pretty good hold on why he specifically asked me to start up with him, and it would necessitate keeping me around. This is more likely to be an issue down the line, so I'd rather deal with it before it becomes an issue.

 

[Psyphon]

Okay I can only really help you with the first question on this topic. I've had my own business before, but I always had a partner who took care of the paperwork and boring details who I trusted ... so I didn't have to deal with any of that stuff. I was more the guy who made things work.

As far as your first point goes though I'd have to say that you should do what I did at my current job. Dig in fast, dig in deep, and make sure that there are few few things that make it so that things are able to even function on a basic level in the process that ONLY you can do. Make yourself indispensable. They've been trying to fire me for 2 years at my job. I've trained like 4-5 people to replace me already. They all fell apart during the training process because I've made it so that ONLY I can do my job. As a matter of fact they CREATED this position in the company JUST for me, and I've made it so that they can't function without it (at least not until I decide that they can).

Just set up a position like that for yourself and you should be good to go. Oh ... and if you ever have an idea that you implement make sure that you are the lynchpin for that to work as well.

 

[Eliyahu]

You must be the one who deals with the customers so that you can create a connection between the product and your name (for example: "i'm gonna buy my vegetables where mark's")... . So the business belongs to your friends but you're the one who the customers know and trust.

The issue when doing business with a friend is that one of you would like to use the situation of being friends for personal gain.

 

[Dark Romantic]

Okay I can only really help you with the first question on this topic. I've had my own business before, but I always had a partner who took care of the paperwork and boring details who I trusted ... so I didn't have to deal with any of that stuff. I was more the guy who made things work.

As far as your first point goes though I'd have to say that you should do what I did at my current job. Dig in fast, dig in deep, and make sure that there are few few things that make it so that things are able to even function on a basic level in the process that ONLY you can do. Make yourself indispensable. They've been trying to fire me for 2 years at my job. I've trained like 4-5 people to replace me already. They all fell apart during the training process because I've made it so that ONLY I can do my job. As a matter of fact they CREATED this position in the company JUST for me, and I've made it so that they can't function without it (at least not until I decide that they can).

Just set up a position like that for yourself and you should be good to go. Oh ... and if you ever have an idea that you implement make sure that you are the lynchpin for that to work as well.

So, basically, just keep an eye out for any opportunities to entrench myself further in the process, take on most of the essential tasks, handle all the networking, pick up skills that would be difficult to replicate... I've got the general idea of it. Thanks!

You must be the one who deals with the customers so that you can create a connection between the product and your name (for example: "i'm gonna buy my vegetables where mark's")... . So the business belongs to your friends but you're the one who the customers know and trust.

So, I'm on the right track with what I'm doing right now... only thing to do now is just add on to it?

The issue when doing business with a friend is that one of you would like to use the situation of being friends for personal gain.

Right now, I'd say we're both in that position... it's just that I'd rather not get the short end of the stick in this deal. :tongue: I get what you're saying, though; keep an eye out for what the other guy wants, and make sure it's in line with what I want.

 

[donkeybals]

What this is, is a partnership. You should consult a lawyer and ask about a legal written contract between you him and his dad.

 

[Eliyahu]

A very important thing to do is like psyphon said is "make yourself indispensable for doing businesses". Maybe because you have the clients, maybe because only you know how the system works, etc, etc, etc.

 

[Dark Romantic]

A very important thing to do is like psyphon said is "make yourself indispensable for doing businesses". Maybe because you have the clients, maybe because only you know how the system works, etc, etc, etc.

Sounds like a fun exercise; how many ways can I make myself more awesome? :wink:

 

[Eliyahu]

Sounds like a fun exercise; how many ways can I make myself more awesome? :wink:

There's always a way.

 

[aef8234]

Sounds like a fun exercise; how many ways can I make myself more awesome? :wink:

Well, you could try "making connections" with his connections, it'll make it harder to be double-crossed/fired/laid-off.
Also, appeal to his laziness and pride, innocently ask how to do the "important stuff", then slowly take over, as a ploy to "help him" (you should do this while you're still buddy-buddy and business isn't in the way).
Also, if your job involves other people and such, make sure you befriend them, people love and miss a smiley face after all.
Oh, and if you could, make a website/page/facebook/etc. about it, easiest way to "entrench" yourself, ever. Just make sure it's not just a "way" to contact your business.

 

[Dark Romantic]

Well, you could try "making connections" with his connections, it'll make it harder to be double-crossed/fired/laid-off.
Also, appeal to his laziness and pride, innocently ask how to do the "important stuff", then slowly take over, as a ploy to "help him" (you should do this while you're still buddy-buddy and business isn't in the way).
Also, if your job involves other people and such, make sure you befriend them, people love and miss a smiley face after all.
Oh, and if you could, make a website/page/facebook/etc. about it, easiest way to "entrench" yourself, ever. Just make sure it's not just a "way" to contact your business.

Perfect; that's pretty much what I had in mind already. I'm working on the facebook page at the moment, actually. Any more ideas?

 

[aef8234]

Perfect; that's pretty much what I had in mind already. I'm working on the facebook page at the moment, actually. Any more ideas?

Steal his business ownership Seto Kaiba style, in a children's card game? Preferably screaming Mokuba whilst having a bowl haircut and having an Aryan Dragon fetish.

But in seriousness, you could also... sleep with him?... Wait, I remember asking about office romances somewhere, I heard it doesn't end well, nevermind that.

You could... blackmail? Something, anything, so long as it's only slightly fabricated.

Fine, fine srsbsns time. Hmm. If you come up with a name and then there's the your name/ his name thingy, put your name first. Dunno why, but I'm pretty sure there's some sort of psychological factor into it, maybe some sort of dominance over it? I mean celebrities derp about it all the time.

 

[BusinessMan]

1. This guy has control over all the important resources.How soon until he realizes he can do it on his own? It'll be more work, of course, but he'd stand to make twice as much, and it's certainly what I would have done to begin with.

It takes more than just money to launch a successful business, it takes a kickass entrepreneur. In fact, if you take two startups, (1) lots of capital but mediocre entrepreneur, and (2) little money but extremely clever entrepreneur, 9 times out of 10 business 2 will come out on top. That's because starting a business isn't about today, it's about 10 years from now. I started my business with almost no money, but I built it. At the current rate I'll be making more money per month than most Canadians make per year by 2013-2014.

Your friend obviously wanted you in on this for a reason, because he knew he can't do it himself. He has money, so he has no "on paper" reason to bring you on board. You're already somewhat indispensable in that regard. I'd be more concerned about your friend's competence as an entrepreneur. Are you sure you wouldn't be better off starting by yourself with a little bit less money now. Remember you gotta think 10 years from now, ie. "Which action will have made me more money 10 years from now?"

I don't know you personally, but from your posts on here I'd say you have the makings of the kickass entrepreneur type. You're an ENTP which is the best entrepreneurial type. Something about psychology made you obsess over it and led you to doing tons of research on it, which is going to help you shitloads in the future with all the different personalities you're gonna be dealing with. And I remember you scored quite high on the narcissism test I posted the other day. Trust me, a high level of narcissism is a prerequisite for most highly successful businesses. Look at any Fortune company, research the founder, and you'll see they were all overconfident, narcissists.

At the moment, I want to secure my position before that becomes an issue: so far, I've been doing that by spreading the word among people I know, but this honestly just seems like an inefficient strategy. Does anyone have any other ideas?

Use your natural strengths. You're an ENTP and, assuming that you have that couple with high intelligence of course, you are extremely clever. You can make something out of nothing. Use that. You are also blessed with the skill of social-chameleonism (yeah I just made that word up), ie. you can quickly size someone up and talk to them in a way that makes them feel like you relate to them. Use that as well.

Also, and I cannot emphasize this enough, sell, sell, sell. Startups are rough. It has taken me two years to finalize see some financial stability. And make sure you're the face of the company. When people think of your company they need to associate your name with it. Just like facebook will always be associated with Mark Zuckerberg, despite the fact that he had some partners at the start. I almost feel bad for you because you have a lot of money to start out with, because you may not feel pressured enough to sell right from the get-go.

2. This is my first (legal) business venture, so, what are the technical details I'd have to keep an eye out for? I'm talking in terms of legal issues, setting up methods of payment, shipping, and all the other boring details I'm going to be handling (Those familiar with Canadian law should answer this, though anyone else is welcome, of course)

I'm assuming you're in an HST-paying province. Make an HST account. The law is something like if you make over $30K profit then you must have an HST account, but you're allowed to have one if you're under $30K as well. The reason I say you should is because you're going to get a nice little break come tax time. Basically, whatever taxes you had to pay throughout the year for your business with various equipment, supplies etc, gets returned to you. Just make sure you don't spend the HST money that you charge your clients. Remember that's not your money.

Is there a contract between you and your partner? Lawyer up and get one in case shit goes down.

Read over the consumer protection act. Consumers (limited to people buying things for themselves, their homes etc) have an extreme amount of rights. I almost got sued once because I didn't know this. Businesses have basically no protection though, which is why B2B sales are so much more complex in terms of paperwork.

3. Conventional wisdom says it's a bad idea to go into business with a friend. How would this affect future business opportunities?

It is. A year and a half ago I had an amazing idea for an online business. Executed properly it would have made millions, possibly billions. I chose to start it with my cousin. Went okay at first, but then we realized our vision for the company wasn't exactly the same. Furthermore, he tried to convince me that the company was his idea! That still pisses me off when I think about it. It almost tore our relationship apart, and my cousin is basically my best friend. Luckily I realized what was happening and I told him I'm out. He tried to convince me repeatedly to stay, but I refused. He tried to keep going with it but gave up. His vision didn't work, but our relationship has been repaired. I'll make my billions another way. Not all people can be replaced by money. MOST people can, but certain people cannot.

But contrary to my experience, there are some businesses which have been successful that were started by friends. These are exceptions though. But, if you're going to go that route, I'd say make sure you guys BOTH understand who's in charge. It can't be both of you. One of you absolutely MUST have say over the other in critical decision-making. You shouldn't be 50-50 partners either. If you want to have even monetary rewards from the company, then make it 51-49, just as long as someone has more say. There are going to be times when you guys disagree about something and when that happens someone needs to be able to proceed regardless of the other guy's opinion. Obviously you go for harmony first, but I'm talking about situations that require action immediately.

4. Any general advice would be appreciated, as well as anything else I missed.

Yes. Business first and foremost is about money. Always remember that. Do whatever it takes to make money. Sell right from the get-go. Until people start coming to you, you cannot stop selling. I have a box at home filled with business cards that I call "the box of leads".

Also, be extremely selective of who you take advice from. For example, the only people I ever listen to are the people who have accomplished what I want to accomplish. My parents think I have no respect for them, because I don't listen to their advice (relating to money) anymore. When I want someone's advice on the next step for my business, I go to the people who are where I want to get to. The people who I plan on overshadowing one day.

Oh and don't be an idiot with your startup money either. I bought tons of shit the first couple of months that I thought I may need. Key word = "may". It wasn't a definitive "I need this to continue". Unless you need it don't buy it. You have no idea how much money I blew. I'm still paying a lease for some stupid-ass piece of equipment that I haven't even used yet. I learned this lesson the hard way.

Another thing is to aim extremely high. Aim for billions, not millions. From a biological standpoint, there is absolutely no difference beginners like me and you, and vets like Steve Jobs. If those guys can do it, then so can you and so can I. That's what I'm aiming for and that's what you should be aiming for as well. If you don't set high goals, you may just end up in permanent small-business owner hell.

I should also add that #1 isn't likely to be a problem right now, since I've got a pretty good hold on why he specifically asked me to start up with him, and it would necessitate keeping me around. This is more likely to be an issue down the line, so I'd rather deal with it before it becomes an issue.

I'm permanently shaky about having a partner. Personally I don't think I will ever have a partner with a significant threshold in one of my businesses. I'll probably have a minority partner here and there. But you're doing the right thing by questioning the situation. I still think you should see if you can do it yourself. Obviously I haven't met the guy, but entrepreneurial aptitude is extremely rare, and the odds are pretty good that you have a significant advantage over him in the aptitude department.

Oh, and good luck!