Friend or Foe?

Carol Fuller, President of Yarn & Thread Expressions and CEO of OpticalLock shares how to keep both your friends and business happy.

Photo by GR Stocks on Unsplash

It is a common practice to rely on family and friends to fill critical positions in the very beginning of a startup’s life. In general, an entrepreneur is idea-rich but cash-poor, so relying on family and friends for both funding and staffing is natural and can often be a successful starting point. However, as time goes by, you could find that your best friend is not the best salesperson or CTO for your business. Now what? You could find that you spend more money and lose valuable time trying to make things work than if you were to let your friend go. At the same time, you don’t want to lose your friendship. What can you do to keep from getting into this situation, whether it be your friend or a family member?

Here’s what I learned from my experience running four startups:

  1. You are nobody’s friend, or relative. It is essential to rigorously maintain an employer — employee relationship from the very beginning. If you don’t, when the time comes to separate your friend from your business, you could potentially lose both friend and business. If you allow your friendship to delay or prevent you from firing your friend when it becomes apparent they can no longer meet the emerging business challenges, by default you will have to decide between your friend or your business. To prevent this situation, have a clear idea of the skills you must have to get your business going. Use this as the basis for a candid conversation with your friend or uncle about whether they can meet the job requirements.
  2. Spell it all out. Most people would think twice about asking their mom or dad to sign an employment agreement. You can probably imagine their reaction if you did ask for an agreement. However, you might be surprised to find they would be happy to sign a well-crafted, thoughtful, and binding agreement which is designed to protect both yourself and your mom-employee, even if she agrees to work for free. Employment agreements spell out the terms of engagement, as well as the terms of separation, and when the time comes, you have the script for termination.
  3. A willing friend does not always equal required skills. At one point I had more work than I could manage, and a friend of mine offered to help me out. She offered to work for a nominal wage, and was enthusiastic as well as personable, so in a moment of desperation, I said “sure!”. In hindsight it was a poor decision. My friend’s enthusiasm was for talking to customers about her personal life and health issues and product preferences to the exclusion of the customer’s interests. I lost several existing and new customers in the short time she worked for me. My friend’s skills were a poor match to the standards I had carefully nurtured for my business, and I should have interviewed her as I would any other prospective employee.
  4. Trust but measure. At some point every entrepreneur realizes they can’t go it alone and will need to rely on others to get the job done. You generally have metrics in place to know if you are making a profit, or your product assembly time is within goals. The same goes for staff, where performance metrics are essential to know whether or not your staff are doing the job they were hired to do. Setting clear goals as well as the means to measure progress towards those goals are just as essential to knowing whether your business is profitable. Staff metrics are not a ‘set and forget’ process; it requires ongoing evaluation of your friend’s performance compared to the metrics you both agreed to use. If your friend isn’t meeting expectations, it will be obvious to both of you. At this point you have several options: revise goals or metrics; redefine the job requirements; or reassign your friend to another position. These options assume one or more will work to the mutual benefit of your friend and your company.

Carol Fuller is currently COO & Co-Founder, OpticalLock Inc. and President / Owner of a retail boutique that caters to yarn enthusiasts. Her prior positions include Co-Founder & CEO of CEYX Technologies; Business and Technical Manager at Hewlett Packard and Quantum Corporation. Carol has 35 years experience in management of technology businesses and is co-author of 15 patents. Her expertise lies in IP management and licensing, manufacturing, supply chain, process and quality improvements, domestic and international business contracts and partnerships, business development and strategic planning. Carol has developed and managed the execution of technology company business plans, developed financial models and strategies, pricing schemes, staffing plans, operating budgets, market feasibility studies, COGS models, and technology readiness processes. She has an AS in Sociology Sciences from Pierce College, a BS in Chemistry with a minor in Criminal Justice from CSU Sacramento; and an MBA in International Business from University of San Diego.

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