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Friends Forever?

Business and friendship can be a very volatile combination if you're not careful.

Ideally, when true friends do business, all the natural laws of negotiation are suspended. The gladiators lay down their swords, and water flows uphill. The buyer demands to pay more, and the seller even insists on taking less!

But the real world instructs us differently: Friendship is better for business than business is for friendship. Valued relationships will often explode or dissolve when business deals get rocky.

At best, it's a scenario that promotes unrealistic expectations and hurtful miscommunication. For one thing, odds are you're more likely to have a spat with a friend you're making a business deal with than one you're not. There are simply more opportunities for you and your friend to get your signals crossed.

And who hasn't been astonished by how differently some friends act when doing business? You think you know someone well, but suddenly, he or she morphs into the insanely competitive or disgustingly docile. But actually, it's a deeper dilemma.

In life, the friendship is important in and of itself. But in deal-making, the relationship takes a back seat to business. So experienced deal-makers are not unduly ruffled by greedy, grabby, pushy, evasive, high-handed, disingenuous and/or manipulative opponents. Hey, it's just business right? "Let every eye negotiate for itself and trust no agent," as Shakespeare wrote. In reality, however, we would never expect true friends to treat us this way. Should they dare, then business becomes all too personal.

Adopting the philosophy of never mixing business with pleasure is one approach. Of course, there's safety in it. With some of your friends (and you know who they are), this is the only way. On the other hand, if you never take the risk, you'll never gain the best of both worlds--a friend in life and a friend at the bargaining table.

It's better to remain open to the possibility. Be selective, but when you do these deals, aspire to an unusual level of candor. Consider laying your cards out on the table early. If you're unsure about how to handle an issue fairly, look to some objective standard or custom and practice for guidance. Here, it's even more important to plan for the downside. Make some contingency plans that are not only appropriate but will also keep everyone involved on speaking terms.

Of course, you should write everything down, just as you would with any other deal. But friends owe each other more than strict compliance with the letter of some contract. Be exceptionally clear with each other about your expectations, large and small. Talk it out fully before the fact.

Remember: The stakes are higher when you do business with good friends. Not only can your deal go south, but so can your friendship. And most of us would agree that it's much easier to make a good deal than it is to make a good friend.


A speaker and attorney in Los Angeles, Marc Diener is the author of Deal Power.

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This article was originally published in the June 2003 print edition of Entrepreneur with the headline: Friends Forever?.

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