When I was seven years old I decided to sell Valentine’s Day cards to the residents in our neighbourhood. After realising that I might need some help crafting my products, I appointed my four-year-old sister as my first official business partner. She was also my partner at my Hawaiian themed cool drink stall at my grade 5 entrepreneur day.
The first time I considered a business partnership outside of the family was during a KTV market day when I was about 12 years old. Together with my friend Lanie I sold costume jewellery at a stall we decorated to resemble an Arabian treasure chest.
Ever since, whenever I get that entrepreneurship itch, I rush to my dearests friends and try to persuade them to jump on the business train with me. Counting Coins is just the latest of my friendship-business mashups.
As we get older, however, fewer and fewer friends seem keen on taking the risk. I guess I can understand why some of my friends opt to stay clear of my crazy ideas – most of them learned their lesson when I had the insane idea of starting a recycling business during our varsity years and convinced them all to dig through the garbage bags of our favourite pubs.
Not going into business with friends (or family) is, however, a universal rule that most people adhere to. I often hear people say that they feel it is simply too risky to go into business with friends or family.
Here are two of the biggest concerns about starting a business with a friend or family member:
1. What if our relationship suffers because of the business?
This is a very common concern. You and your best friend decide to open a restaurant. At first the enthusiasm runs high and all goes well. Then the business starts struggling with cash flow. You feel she should cut down on the menu items, while she blames you for not managing the staff properly. Before you know it, the business is dead – and so is your friendship.
While this is a valid concern, let me ask you this: have you ever lost any friends? Do you have any past relationships with friends or relatives that went sour? Are there any people you used to be close to, but with whom you had a fight with and ended up not speaking to again? Sure you have. Now, how many of those ended relationships were because of business ventures that went belly up?
That’s not to say that you should purposefully throw your friendship under the bus – the reality just is that relationships are always tested in various forms. A joint business venture can strengthen or weaken your friendship, but so can almost anything else you do or attempt together.
2. What if the business suffers because of our friendship?
Sticking with the example above, what if the business really is struggling because your friend has too many items on the menu? She is, however, so proud of her choices, and fulfils her part with much passion and enthusiasm. Since she is your friend, and her happiness is important to you, you decide to keep quite despite the consequences for your business.
Again, this is a valid concern. Could you however, guarantee that emotions would never get in the way when partnering with a stranger?
Types of personalities will have an influence on any business partnership, whether or not you were friends before starting your businesses or only got to know each other afterwards.
Is the South African culture scaring away collaboration?
While it is not a uniquely South African opinion to not mix business and friendship, I do feel like it is a prevailing part of South African culture. Collaborating and sharing has never been our strong suite – especially among black and white South Africans.
There is a local stereotype that family businesses in South Africa is dominated by minority cultures like Portuguese, Greek, Chinese or Indian families, especially in smaller and rural towns. We often see anger about the perceived success of these businesses when protesters loot “foreign-owned” businesses. While it is definitely not true that everyone from these cultures ends up working in family-owned businesses, we might be able to learn some lessons about collaboration from this stereotype.
In a lot of these communities, entrepreneurial ventures with family or friends were started by first-generation immigrants out of a sense of necessity.
According to Forbes.com, the same trend can be seen in the US, with 16% of first-generation immigrants turning to entrepreneurship. According to a 2016 study by the Wall Street Journal, immigrants founded 51% of U.S. Billion-Dollar startups. According to Inc.com, immigrants start about a quarter of new businesses in the US despite, only making up 13% of the population.
If you arrive in a strange country and need to turn to entrepreneurship in order to put food on the table, it would make perfect sense that you collaborate with friends and family in similar positions – especially if you are in a country where there is hostility towards immigrants.
In South Africa, it seems like we are more likely to turn to “strangers” like the government, banks or self-proclaimed business gurus when seeking entrepreneurial support, rather than turning to our peers. Perhaps we should also consider looking for more ways to collaborate with those we already know.
If you look at the most successful businesses of our time, it is difficult to find one that was not founded by a group of friends or family. While some might argue that there should be a distinction between family-owned and friend-owned businesses, I believe that the fundamentals are very much the same, and that the success of either depends on the dynamics of your relationship. Going into business with your friend can be just as hard or easy as going into business with your romantic partner or a cousin. We are living in a time where we are redefining the concept of what constitutes a family. For some, blood is thicker than water, while others regard their friends as part of their family.
Here are just some examples of successful businesses founded by people who had a relationship before they became business partners:
• Microsoft: founded by childhood friends Bill Gates and Paul Allen.
• Ben & Jerry’s Ice Cream: founded by childhood friends Ben Cohen and Jerry Greenfield.
• Google: Sergey Brin and Larry Page became friends at university before starting Google.
• Starbucks: founded by friends Jerry Baldwin, Zev Siegl and Gordon Bowker.
• Mattel: founded by friends Harold “Matt” Matson and Elliot Handler.
• Harley-Davidson: founded by childhood friends William S. Harley and Arthur Davidson.
• Apple: founded by friends Steve Wozniak and Steve Jobs.
• Hewlett-Packard: Bill Hewlett and Dave Packard became friends at university.
• Others include SnapChat, The Onion, Procter and Gamble.
Starting a new business is risky, stressful and costly no matter how you do it. One thing is sure, however: doing it on your own can be lonely and has its own unique challenges. If you have the start-up capital, you might prefer to appoint strangers as employees to do the things you don’t have the time or skills for. If you do not have the capital, there is nothing preventing you from sharing your startup with someone you trust and respect – perhaps a friend or family member who has skills or expertise in areas you don’t.
Just like carpooling, entrepreneurial collaboration is beneficial for the participants and the economy as a whole. After all, owning part of a successful business is better than owning 100% of a failing one.