My Mistake… Doing Business With Friends

This summer I broke one of my life rules – doing business with friends.

  • I don’t sell things to friends (cars, appliances, tools, computers, etc.).
  • I don’t buy services from friends (construction projects, services, financing, etc.).

If a friend owns a restaurant, sure, I’ll go in and buy a sandwich or something. But, when it comes to exchanging hundreds, maybe thousands of dollars… I won’t do it. Period.

Why?

  • I value the friendship too much. That “thing” can and will become a wedge in the friendship. It is 99% guaranteed.
  • I don’t like conflict, and there is a 99% chance there will be conflict when friends do business together.

There are four main reasons why I think it is bad:

1) Things are not in your control. For example, you may be selling a used refrigerator to a friend who needs one. You bought a new one, so you sell the old one to a friend for $400. First of all, you probably could have sold it for $700 on Craigslist, but you took less because of the friendship. Your friend thinks $400 is still too much because they’ve seen the fridge in your house for the last few years and as a friend you should give him a better deal. Also, the fridge worked excellent for the last 5 years. But, six weeks later the compressor goes bad and now your friend is stuck with a refrigerator with a bad compressor. It could have been the compressor was on the edge of going bad before you sold it to him, or it could be that his electricity surged and fried the compressor. Who knows?

It’s out of your control. You cannot control how things will work once they leave your possession. All things deteriorate, whether slowly or quickly. There is a 99% chance that things will go bad once it leaves your hands.

2) Communication breaks down. This is especially true when you are buying something from a friend, such as a home improvement project or a financial service. There are always other people involved, and somewhere along the line, communication of expectations evaporates. For example, if you use a friend to help you with your 401K (which is a bad move from the start), you are turning over information about your financial situation to a friend. They begin to know the details about how you spend money, the amount of money you make, and then turn it all over to their company. There are hidden fees that hit your account, underperforming expectations, loss of investment, and before long, there is a huge wedge between you and your friend.

3) There is now a unspoken expectation that hovers for a long time. In the two examples above, even if things do not go wrong with the refrigerator or 401K, there grows this sense of entitled favoritism. I did something to help you when you were down or to boost you up, so, I deserve a little bit of love, favor, and priority when it comes to our friendship. It is SO true. For example, a month after doing business with your friend, you call him up to get together to watch the game. You want to go to Buffalo Wild Wings and watch the game, eat wings, and cheer with the crowd. Your friend balks and really doesn’t feel like it. You hang up the phone thinking, “after all I did for him, he won’t do this for me.”

4) You lose good judgement. I have bought things from friends that I wouldn’t dream of buying outside of the friendship. I would never invest in a 401K (blah!), but somehow I go brain dead when it comes to trying to help a friend. I forsake my better knowledge and experience and compromise for less. I understand it is good to help a friend, but I just believe there is a demon in the money that exchanges hands between friends.

You may think I’m a jerk for thinking this, but I would rather buy from a stranger or a store I have come to trust over the years and keep my friendships out of my financial dealings. I would rather have my friend go to Craigslist himself and find a fridge for $400. Nothing is lost. We’re still friends. I could even drive with him to go pick up the fridge he bought, help him install it, and admire his savvy purchase to make him feel proud.

But… I forgot my life rule in the blink of an eye this summer. A friend of mine was hurting financially. I had offered groceries, fill up the gas tank, go out to eat, etc. No. No. And no. But, he is a rep for a local roofing company. A hail storm did damage to our roof, and he was the first to call me. I trust my friend, but the company he represents doesn’t give a rip about our friendship.

I signed the paper to have this company do my roof. My friend is only a contract position. He is not an employee. He only earns commissions when someone gets their roof done. The company, as I am learning, operates differently than how my friend has said things would go. In fact, so far things are 0-7 in how I was told they’d go.

  1. The appraisal did not go as I was told.
  2. Communication as been 100% non-existent from the company.
  3. Materials were not delivered when they were supposed to.
  4. No workers showed up on the day they were supposed to.
  5. Prices were different than I was told.
  6. Parts that were to be covered were not covered.
  7. The job… eh… less than happy with the finished project.

My mistake.

It would have been better if I had chosen another roofing company. It is easier for me to explain that I don’t do business with friends than it is to repair all this crap.

Like I said, it’s not that I don’t care about my friends. Friends carry one another’s burdens. I am more than willing to help out a friend, and have many times. But, when it comes to doing business… I’m out.

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