Expert: Terry Knorr - 6/2/2006

Question
I have approached my bank manager who has advised me that they will loan me some money to start my business and that they will give me in the region of £130,000 which is roughly the value of an average first time buyer home, although Nationwide and Halifax (two of the top banks in the United Kingdom of the UK) believe the average price ranges from £158,000 to £164,000. My bank manager is so enthusiastic about my business proposal that he has begun to use soap for his own personnal hygiene reasons- that just shows how much he rates my business.
My question is, my friend Trevor Parkameter wants to join in on my idea as he is a keen candle moulder and he believes his experience will help us mould things we have never believed possible, such as soap candles. Do you think I should let him join my business or should I tell him to get stuffed? He is a nice chap but I am not sure he would fit in with my business plan as he has never been a great mate ever since school when he kissed my girlfriend behind my back when I was 11.
Please reply!

Graham

Answer
Hi Graham!

I know from personal experiance that it is exciting to have a friend as a business partner.  However,  I've found that, although he might prove to be a good financial asset, the friendship will likely suffer.  Also, I've learned that, although having a friend as a business partner might be enjoyable, it can be very bad business.

If the friendship is important to you, I would recommend against the partnership.  If the business is more important to you, and you think he might be an asset, I would recommend that you procede very carefully.  Perhaps your bank or lawyer could help you develop clear and legal lines of responsibility, accountability, and authority.  Do you want to maintain authority to dismiss him if he proves to be a liability?  This will likely need to be layed out in writing to protect you from a possible lawsuit.

In summary, my 2 recommendations are:
1.  procede with caution.
2.  seek advice from you bank and/or lawyer.

I hope you find this helpful.  I wish you great success in this endeavor!  

Terry