Can't We All Be Friends? Don't sabotage your business by making decisions solely based on relationships.

While running an internet company, my business partner and I handled business relationships differently. I emphasized having long-term relationships with our clients based on mutual trust; he went for the quick infusion of cash and was comfortable inflating our prices to get money in the bank regardless of how our clients felt about it.

I was more worried about what our clients would think if I raised our prices and ended up undervaluing our work to keep the clients happy. As a result, we were often in a cash flow crunch because I was afraid to hurt the relationships by discussing money.

While relationships are important in business, do you ever wonder if you're harming your business by putting relationships first?

When Emilie de Azevedo Brown, 36, and her sister first started their company Two Little Hands Productions, they had a third business partner helping produce their sign language videos for children. "As we worked together, we truly became friends," says Brown. "As issues arose with how to structure our partnership, we were hesitant to discuss the details for fear of disagreement and stressing the relationship."

Brown says that when they couldn't avoid the discussion any longer, they quickly realized that the other partner was working with different expectations and assumptions about the business relationship. They ended up parting ways with the other partner, an experience that wasn't pleasant for any of them.

Julie Subotky, 39, admits she has kept employees too long--even though the company no longer needed a position or a person wasn't right for the job--simply because she liked the employee. She's learned from her mistakes, though. "Remove yourself from the relationship and take a look at what's best for the company," says the owner of Consider It Done, a lifestyle management company.

Judith E. Glaser, author of The DNA of Leadership, says there are several ways relationships can hurt a business, including the following situations:

1. Using consensus as a way to avoid difficult conversations could cause conflict and problems in your business and your relationship if divergent ideas aren't heard and discussed. In Brown's case, the conflicts weren't clear early on because she and her partners avoided difficult conversations.
2. Choosing friends to be on a team won't guarantee success. If the friend lacks the necessary skills to do the job well, says Glaser, "We may miss the boat because we hired based on relationships."
3. Exhibiting favoritism can create an us-vs.-them feeling among staff. "Others may watch this play out, and it can cause an environment to become toxic," says Glaser.
4. Giving in and giving up can stunt your growth. "Sometimes when we hold relationships so sacred that we don't push for more discussion on something we feel strongly about, we're risking making the best decisions in favor of keeping a friend," says Glaser.

Looking back at her own experience, Brown advises that business owners should never make assumptions. "Have all business arrangements memorialized in a formal agreement, even if the business relationship is with a friend or family member," she says. "That way, there's less room for misunderstandings, and it's easier to separate the business part of the relationship from the personal part."

As long as you're careful to keep your business top-of-mind and don't shy away from important discussions and decisions, relationships can be a boon to your business. "Those men and women who cultivate an interest in others that goes beyond the task at hand set into place healthy, open and caring dynamics that often lead to better decisions, better results--and better productivity," says Glaser. "And in business, that counts."