Written by: Roselyn Knight on: March 11th, 2014
When we have had a few drinks with our friends we may end up dreaming of what life would be like if we all resigned from our jobs and set up a business together. We then move on with ideas and the name of the business and who would do what and we all genuinely believe that we will be so rich and best of friends forever. Some just leave it at that i.e as some banter amongst friends and a dream that we know will just stay as that – a dream! However a number of businesses start from an idea being shared, a dream in common or a passion for something in particular. And from being just friends the relationship moves to a different level. Lindsay Baker, a BBC business reporter tackles this topic in one of her articles: ‘Can Friends Make it in Business?’http://www.bbc.co.uk/news/business-26324173
Some businesses that started from a friendship are featured in Baker’s article and hats off to these successful business ventures. However what is also mentioned in this article (and yes this is fundamentally important), is to “agree it in writing”. It may be awkward to have THE conversation but it is necessary and what is even more important is that whatever is decided and agreed upon should be set in writing. Various issues need to be addressed when a company is set up and it is important that those involved know what their obligations as well as what their rights are.
If you and your friend decide to set up a partnership you would need to think of an LLP partnership agreement. This would ensure that disputes are kept to a minimum and both parties are committing to what is set out in this commercial agreement.
If you and your friends are investing into a company through cash and/ or your valuable time you must ensure that your investment and shares are protected. The best way to do this is to have a shareholders agreement drawn up. The business may start as a small venture from a desk in the shed but a business does grow and with growth businesses face different encounters – best to tackle these challenges at the early stages.
Friends and business can go hand in hand and they can be successful too but this is dependent on a number of factors and if you really want to safe guard that friendship then “agree it in writing” as this will give you more reassurance of great nights out with your friends!
For more information on the services we offer with regards to what has been discussed above please visit http://www.gannons.co.uk/expertise/contracts/