56: Should You Go Into Business with Your Boo?

EPISODE 56

[INTRODUCTION]

[0:00:01.0] AW: You’re listening to The Transcend Podcast. I’m your host, Asha Wilkerson, an Attorney by training and an educator at heart. This podcast is all about empowering you to build a business and leave a legacy. Here’s the thing, the wealth gap in America is consistently increasing and while full-time entrepreneurship is not for everyone, even a side hustle could change your financial landscape if you’re intentional about using your business to build wealth. I’ve run my own law firm for over 10 years and in that time, I’ve helped countless California businesses go from idea to six figures. On this podcast, we talk about what it truly takes to build a sustainable business and find financial freedom. Let’s dive in.

[INTERVIEW]

[0:00:44.3] AW: Hey, you all. This episode has been a long time coming and I am so excited that I am finally able to sit down and record this episode. Should you go into business with your boo? That is the question that a lot of people ask because I think our society kind of romanticizes doing business with your boo. “Oh, we started this business together and life is great. Now, we’re millionaires and living in a castle and traveling wherever we want to go” and all these stuff but let me tell you, in my experience, maybe because people come to me most of the time when things go wrong, going into business with your boo is a really, really, really, really not so great idea. 

Not the best thing that I think that you could do but I know, we all love-love. We all want to have that like ultimate partnership, we are life partners, business partners, athletic partners, all these partners, so if you’re going to do it, then I have a few pieces of advice that I really, really want you to follow. 

I’ll tell you a few stories first. Okay, so the first story that I am thinking of is a person who reached out to me and, geez, this actually applies to like going into business with your boo and your best friend. So first story is that a woman started a business with one of her really good friends and it was a wine business. 

Actually, both stories are about wine businesses, that’s interesting. It was a wine business and somebody is doing the marketing for the wine business and because the person A’s profession was to be a marketer, the person B was just going to support and help build up this business. They had more back end in office experience and so they started this company together. 

[0:02:23.3] It got pretty big and then something happened. I am not exactly sure what happened, maybe one person felt like the other was not pulling their weight, not making enough money, not doing things that were helpful or useful to the business and now, their friends no longer want to be friends but they’re still business partners and of course, you don’t want to just leave money on the table so you are going to fight to get the money that you think you deserve. 

But what happens when the business isn’t profitable or it’s on its way but it’s not quite there yet or both people have invested their time and their money and their energy into the business? Who says that person A could kick person B out? How come person B can’t kick person A out or how do you decide to work together? 

These things become much more complicated when you have a previous relationship with the person you are in business with because we have all of these expectations that we put on the other person that are probably not clearly communicated and then our feelings are so much more hurt because we have this history with this person that we think should take us above the business BS.

But guess what? Business is tough, business will challenge you. It will personally attack you. It will attack the friendships and the relationships and you have in your life and so if you are now in business with your best friend or your family or your boo and things are tough, it can be really hard to separate the personal side of the relationships from the business side of the relationship. 

[0:03:47.2] So if you are in business with your sister and your sister always does something or always teases you about something but now you are sensitive about business and she is talking about how your second toe is longer than your big toe and it’s just not the right time and now you want to blow up the business because your sister has never let you live from the time you were five or six years old until today running this business. That’s something that has nothing to do with business and everything to do with interpersonal relationship. 

The other story I am going to tell you about also has to do with a company that was involved in wine. One person started the business and the partner said, “Hey, you know I think I can help you.” Person A said, “Yeah, I think that you might be able to contribute some financial sense to the business.”

Then person B, partner B got really controlling, started to get really abusive, verbally abusive, telling person A that they didn’t know what they were doing. They are the reason why the business isn’t making any money and they happen to get alone together because they’re both on the documents as owners and so both of their credit qualified them, both of their history qualified them. 

But now, person B is like, “We’re not going to spend his money because our liabilities will outweigh our assets” even though the loan was taken for the particular purpose of building out the place and being able to do some advertising to get more money into the business. So then, when they try and break up where person A decides that they want to leave person B because the relationship has gotten abusive and physically threatening to their safety, person B says, “I’m not going to let you spend any money in the business” as a way to sort of hold them hostage because the personal relationship has gone down the tubes. 

[0:05:31.1] Now, these are extreme examples but do you see how these things can get complicated really, really quickly and you may be thinking, “Well, my boo and I, we’re not going to be like that.” I guarantee you that every person who ended up divorced did not foresee divorce in their future when they walked up to the altar and said “I do.” So no people are entering into business or into a business relationship with a partner that they think that they’re going to split from in the near or distant future, otherwise, why would you even decide to go into business with that person? 

Here’s the thing, these are my extreme stories but they are also common. So I am going to tell you that if you do decide to go into business with your boo, there are three things that I want you to really pay attention to. And I do think that it’s different if you start a business with somebody and then you become boo’s or you become partners, I think that tends to be different than if you are in a romantic relationship or in a familiar relationship and then decide to start a business. 

I don’t know why it’s different maybe because when you are hashing out the things in the business, you’re not so personally invested, right? Like it is not personal and then you can develop those personal kind of friendship or relationship but if it goes the other way around, it is much, much harder. 

[0:06:48.2] So if you are going to go into business with your boo, here are three things that you need to do. The first thing that you need to do is you need to clearly define your roles and responsibilities, who is doing what and who is responsible for what and how will that be measured. 

This is the same thing that you would do and I encourage you, of course, everybody to start an LLC or corporation to protect their business and their assets. These are the things that you want to put into your operating agreement for an LLC, your bylaws for a corporation and maybe even like the agreement that you two have as partners in the business that you have written between yourselves that are to put a part of the business formation documents but actually explain what each party is going to do. 

So again, what are the roles and responsibilities? What does each person good at? You don’t want to duplicate yourself in business, at least not right away. You want to have an owner that is different from you, that brings other things to the table. That is an asset, a value add in a way that you aren’t, we can’t be all good at the exact same thing. So if I am good at talking to people, meeting people in public, I would want to bring someone in who is better at the back end. We can’t both be doing the same role because then, the business won’t grow in the way that it needs to grow. 

So clearly write out the roles and responsibilities, agree to them and have a decision made in advance about what happens if one party thinks that the other party is not carrying out the roles and responsibilities. 

Now, I tell you where this also comes up as a point of contention is if one person is in charge of marketing and the marketing is slow. If one person is in charge of onboarding and there is not enough clients to onboard, right? It just takes time to build a business and consistency. It takes a lot of trial and error to build a business and it becomes really easy to put the blame on somebody else when things aren’t going the way that you want them too. So clearly define your roles and responsibilities. 

[0:08:47.6] Okay, number two is designate a tiebreaker. This is a big mistake that I see a lot of business owners making is that they have one business partner and/or multiple business partners and they all have an equal say in the business. That only works if there is an odd number of people because if there is an even number of people and you’re both 50/50 or 25/25/25/25, then you can always end in a tie. 

You don’t want that. Somebody has to be the final decision maker so that the business can move forward and that needs to be written down in the agreement that you have between the two of you, which can also be codified in the operating agreement or the bylaws for the corporation, okay? 

You cannot end in a tie and ultimately, someone is going to have to make a decision. If you feel like the other person is not making the best decisions for the company, you want that person to be you and it only has to be 51%. This has to be majority. So 51% okay? Again, that needs to be written down because if for whatever reason, you end up having to go to court because your business partner says you’re making bad decisions or you are trying to get them out, you want that piece of paper that says that you’re 51% owner or that you are the tiebreaker in making the decisions for the business. 

Now, who should be that 51% owner? I would say you but if you are looking at getting certified as a minority-owned business, then you want to hit as many boxes as you can. So you can be certified as a minority owned business if you are a woman, if you are identified as female. If you are Black or person of color, if you are disabled and you can also be certified as a veteran owned business. 

Now, what happens if I had a business form that was it was a white woman and a Latino male. So they both check different boxes and I think they ended up going with the Latino male, I believe. I don’t remember actually which one was 51% owner. So that when they go get certified either as a woman owned business, the woman is 51% owner, okay? So two, you have to designate a tiebreaker. 

[0:10:58.2] Number three, run your business and your romantic relationship separately. Do your very best to leave your business in the business and have some separation between your business life and your romantic life. 

Now, in the beginning stages of entrepreneurship, it is custom to bring work home with you to be working around the clock but I really strongly encourage you to find some space in your life to just be partners. 

Really if you can, keep work within work hours or have an agreement that this is when we’re going to work together because it may be worth it to you to forgo the business if the relationship is worth preserving or maybe the opposite. It may be worth forgoing the relationship if the business is working well but ideally, if you are going to start a business with your boo, you’re not going to have to forgo either one. But you have to put your balances and things like that in place ahead of time, so that you can still preserve the sanctity of your relationship and move forward and make progress in your business, okay? 

It is not easy. It is really not easy especially when it’s a family, especially when it’s your boo and you might already be on kind of rocky terms or a best friend that you’re starting a business with. It will be easier when you set out separate roles and responsibilities that one person has domain over this area, the other person has domain over this other area, designate who is going to be a tiebreaker. Maybe it’s I’m the tiebreaker in marketing but you are the tiebreaker in back office operations, whatever, play to your strengths and make sure you take the time to separate your business from your relationship. 

[0:12:53.3]: Again, I don’t recommend getting into business with your boo but if you are going to do it, make sure that you have those checks and balances in place so that both relationships can be successful. 

All right, if you want to talk to me a little bit more about this please, please let me know. You can head on over to my Instagram page, that’s the best way to get in contact with me. My handle is Asha Wilkerson Esq. and I look forward to talking with you. 

If you like this podcast, you feel like this is a good episode, please don’t hesitate to share with people. Again, our goal here at Transcend the Podcast is to help business owners, people of color use their businesses to build wealth and leave a financial legacy. 

That’s what we’re talking about all day long, that’s what I am giving you the tools and the tips and the tricks to do and I would love it if you would help me spread the word. All right, ciao-ciao. 

[END]