The Snags in Doing Business with Friends

Posted on June 1, 2019 in Business Transactions

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It’s so easy to get sucked into an awkward spot when doing business with friends. It can start out as an exchange of expertise (a barter of the minds, if you will). Add in a dollop of friendly advice and MasterMinding. Mix together in a bowl . . . and watch the uglies emerge.

One colleague (“Joanne”) spent months helping her college friend, “Darla,” develop her website and blog. Joanne shared all sorts of valuable information about how to drive traffic, target influencers and handle the process of blogging so that itwouldn’t overwhelm the rest of Darla’s business. Joanne also thought she’d get something out of it: Darla has a lot of expertise in an industry that Joanne wanted to break into. So Darla seemed the perfect case study.

One day, Darla told Joanne that she had a potential client for her–another company wanting to start a blog. But there was a hitch: Darla wanted a finder’s fee. This got Joanne’s nose out of joint, given all she had done for Darla. For free. After a lot of back-and-forth, Darla says, “Oh, never mind–I’ll just help the client do it on my own. I’m not really competing with you, anyway, for the business.” Joanne was furious . . . and bewildered. After all the time she had spent with Darla–had she unwittingly ended up training her next competitor?

Here are some ways that Joanne could have managed the relationship better:

  • Put a limit on the amount of time she was prepared to spend for free.
  • Make it clear (ideally, in writing) that this would be a barter relationship and determine how she wanted to be “paid.”
  • Given Darla just enough information to understand the process, but not so much that Darla could build a business on it.
  • Treat Darla like any other client and have her sign a non-compete, saying she won’t use the infomation in connection with a competing business.

Any other suggestions?

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