Welcome to “Small business, Big Mistake” where small-business owners face up to their biggest mistakes and share advice to help your company avoid the same fate. Check back the On Small Busines every other week for the latest entry.
I wasn’t looking for a new job — let alone a new business.
I was an at-home mom taking care of my youngest child, a sophomore in high school, and I had a home-based business making clothing for children. Over the past decade, I had on occasion sewn for Monday’s Child, a small children’s boutique in Old Town Alexandria.
So when I heard that the owner’s husband was retiring and that she wanted to sell the shop, I was intrigued. I had always been interested in owning and running my own business. Over the next few months, I started asking several of my friends whether they would interested in going in as a partner with me and buying the shop.
One of them cautioned me about entering into a 50/50 partnership with a friend and asked if I had an exit plan. I didn’t. After all, it was only a children’s shop — what serious conflicts could possibly arise? Maybe I would want to order red shoes and she would want to order blue shoes. If so, fine, order the blue shoes. No big deal.
Related: Small business, big mistake (Ep. 2)
Not long after that, one of my closest friends said yes. She was my friend of about 10 years, and she had helped me through some difficult times in my life. We became business partners, but without any opt-out conditions or formal agreements.
All went very well — for about six months. Then the strain started to develop.
Six months later, we had split for good with the shop still in debt. So, we spent the better part of the next six months trying to work out the division. Because we had not planned for the business agreement to fall apart, we had no rules or guidelines to follow.
Ultimately, I wound up assuming all of the debt and kept the store, and she did not get back any of her initial capital investment. Nobody walked away happy, and the two of us haven’t spoken since. Our once-close friendship fell apart with the business partnership, and I regret that.
Common wisdom says not to let your brother-in-law renovate your bathroom because you will end up with a very strained relationship. Now I know the same can hold true for going into business with your best friend — especially without an exit plan.
Melinda Lynam is the owner of Monday’s Child boutique in Alexandria, Va.
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