Both as Flute Focus Business Manager and through my professional experience, I am well aware of the enormous stress individuals exert on themselves when going into business, quite apart from those stresses imposed on them by external factors. Some time ago I was asked to comment on the stresses that result from blurred lines between one’s personal and business life, i.e. when you go into business with your spouse/partner, family or friends. When business is good, all’s well, but huge problems can occur as soon as business difficulties arise. A few sample situations:

-If a strictly business partner misbehaves, the courses of action are pretty clear, but what if that person is your spouse or ‘life partner’? How do you pull that partner back in line or discipline them without getting divorced? Or would a divorce be an inevitable consequence if the misbehaviour is truly outrageous, and if so are you prepared for that risk?

- Who really ‘owns’ the business and any value generated? Copyright? Intellectual property? What do you do if one partner wants to sell their share, to cash up and have no further involvement? What happens to the business if the personal relationship breaks up?

If you have decided that you are professionally compatible and that a business partnership is in your future – what’s the next step?

I suggest a starting point is to carefully consider the nature of the partnership, and in particular whether a simple solution is to set up a company. In general, the rules surrounding companies and the roles of Directors are pretty clear cut, and it seems to me to be an elegant way both for all parties to be quite clear about expectations up front, and to keep their personal lives at arms length. Structures and procedures can easily be included in the constitution for a company, dealing in particular with issues like voting rights, limitations on sale of shares, and so on. Equally important, the company’s vision can be agreed and stated.

I realise all the above sounds a bit ‘over the top’ but in reality all it means is sitting down, identifying and then agreeing what you want to achieve. Is this a small ‘cottage industry’ to promote your music and get you some gigs after work , or do you intend to build a music retail empire with a view to it becoming a large, full time occupation for many people? Do you want it to be your main source of income, or perhaps a nest egg where you intend to sell it for a large amount and retire on the proceeds?

It should go without saying, but I will say it anyway – seek legal advice before setting up a company to ensure you go into it with your eyes wide open and that the interests of all the parties have been adequately addressed. I suggest that it is the equivalent process as a ‘pre-nuptial agreement’ before a wedding and should be approached the same way.

This begs the obvious question – what do you do if one of the proposed partners objects to getting advice, or objects to a formal structure? I suggest that automatically disqualifies them from being a business partner. My, admittedly hard-nosed, view is that if they are going to object to what is no more than standard commercial due diligence then what are they going to be like making more serious business decisions? If they object to professional scrutiny then what are they trying to hide?

Once set up, I believe it a good idea to set rules about when you are ‘working’ and when you are not. Numerous family or friends partnerships are successful but they can also create added pressure in your personal and professional lives. Ultimately you want to remain friends and have your relationships survive, and keeping them separate in some way may assist enormously. This separation may be time based, e.g. ‘we work on the business only in certain hours’, or physical, e.g. ‘we only work on the business in a set office or studio’, or both. Apart from the relationship with your partner, I think it helps with children as well – it is hard to have ‘quality family time’ over dinner if the table is piled high with business paraphernalia, or your attention is divided.

Even with the right structure and good separation between family and business time, things can still easily turn sour, and if it’s family or friends it can be difficult to deal with problems through the Courts. How would you feel about suing your mother? But I believe the key is being able to abstract the situation away from family life. In simple terms, you need to agree how to disagree and how to deal with such issues.

I often like to quote Fisher and Ury from their seminal book on negotiation ‘Getting To Yes’ – “Be hard on the problem but soft on the person”. Always, always, always remember that it is not the person who is the cause of the problem, it is the behaviour or actions of that person. This is not a semantic distinction, but a genuine and important difference that should guide you into the appropriate way to handle a problem, especially with a spouse. For example, turning it around, it might pay to remember that you married them for mutual love, respect, etc., etc ., not their ability to run a business enterprise. If, to be blunt, they are abject failures at the latter, why should that affect the former?

Sometimes mediation is a good answer. This may be done formally through a commercial mediation service, or may be done sometimes informally by having a trusted mutual friend or family member who can at the very least act as a sounding board if not a neutral umpire. Just remember that if the dispute is between two family members, then having a third family member trying to resolve the matter may simply make it worse.

And that all leads back to the fundamental question – do you want to go into business with family or friends in the first place? And there is no easy answer. After you have considered whether you have compatible work ethics, similar goals and visions (short and long term), clear expectations and acceptance of each other’s roles, strengths and weaknesses, not to mention whether your relationship is in good shape, you may simply come to the decision that it is not for you.

All I can say is that all the successful business relationships that I have seen are based on the same mutual respect on which are based all the successful personal relationships I have seen – with the same open, honest, and timely communication being evident throughout, and with the same arguments, stresses and strains also evident throughout.

At the end of the day, people are people, relationships are relationships. It is over to you to make them work or fail, no-one else.

Maurice O’Brien worked for many years as a mechanical engineer before moving into IT and general management, and has a post graduate degree from the University of Auckland Graduate School of Business. His work life balance comes from running marathons, hiking over mountains, building boats, riding motorcycles, and being a co-Director of the Auckland Charity Hospital Trust. Musically, his eclectic tastes range from opera to heavy metal, plus he is active as sub-Editor and Business Manager of Flute Focus.