Q: Free Advice and Doing Business With Friends

Doing business with friends presents a number of challenges for entrepreneurs, as does setting limits on asking for “free advice” to know when to pay.

Q: Doing Business With Friends

Hidden Costs and Risks to Doing Business with FriendsQ: I am a partner in a boutique consulting firm that helps small businesses with their marketing.  I have given advice for free on numerous occasions and am very happy to help where I can. I really want to see my friends’ enterprises succeed. However, none of those friends ever sought to engage with me professionally or offered to pay me. I think they trust me: they certainly have taken my advice and seen it work. I worry that my positioning is wrong– they may think that I’d be too expensive or that I’m not really interested in their business. Perhaps it’s that I need to “ask” for the business: but this is something I find very difficult to do with friends because I worry about trading on the relationship for a transaction.

I know you run a small consulting firm in Silicon Valley. How have you handled this situation?

A: Where I Draw the Line Between “Free Advice” and “Paid Engagement”

Everyone has to draw the line between “free advice” and “paid engagement” in a different place. I work with very early stage entrepreneurs on new B2B product introduction, lead generation, and sales. Like you, I provide a lot of free advice to friends and former coworkers (sometimes before they ask, which I suppose is a professional hazard). I enjoy playing midwife to new products and helping teams come together.

Office Hours

Office Hours ButtonOffice Hours (see “Office Hours: Set Your Own Agenda“) allow entrepreneurs to schedule the equivalent of a paid working session. Just as in a paid working session, they will get more out of it by providing materials in advance for review and framing their issues directly. Sometimes I get urgent requests where a team is facing a situation or challenge that was new to them or serious and unanticipated. In these cases it can be hard to pull and agenda together and in fact it’s more useful just to get all of the facts and perspectives on the table.  This also happens with clients from time to time. In those cases I spend time helping them to sort out the facts and foreseeable implications of potential courses of action.

Office Hours is also a trust building exercise: not everyone wants to start on the hardest problems first with someone they don’t know. Entrepreneurs can schedule one of these a year at no cost and get a written summary of findings, suggested next steps, and a list of up to three areas where we may be able to help.

I think this matches your “Call a Marketing Friend,” but I ask for an agenda instead of money. Because I work with earlier stage folks, I find it’s more useful to have them write something down in advance instead of charging a nominal fee to see if they are serious.

Bootstrapper Breakfasts®

The Bootstrapper Breakfasts in Silicon Valley are a roundtable discussion that take place three times a month in different locations in Silicon Valley (and another dozen or so across the US facilitated by volunteers). An entrepreneur can put an issue on the table and get advice from peers. The diversity of perspectives often helps shake folks out of a rut or a situation where one or more self-imposed constraints may not reflect the true reality.

Other Free Advice Situations

Several on-line forums including Lean Startup Circle, Philly Startup Leaders, Hacker News, and Bootstrapped.fm. I find the entrepreneurs in those forums tend to ask questions based on real challenges and real needs. While there are some high quality reference posts on Quora, I have not found the questions asked in the last few years that are related to entrepreneurship to be based on real pain or real need.

When friends call me I offer free advice, I tend to draw the line at more than a few hours of work. If the problem was not foreseeable or it’s clearly an emergency I tend to be more generous.  Most of the time it’s people asking for sounding board and one or two conversations to put issues on the table and walk around them.

When I Ask Friends for Free Advice

I also reach out to friends and former coworkers and ask them for advice or help on a specialized business or technology topic. I try to be as concise as possible and include them in the related opportunity if that is appropriate. Other times I am frank that I am asking for a favor. I try to limit how much of their time I am asking for to less than an hour unless they are clearly energized by the topic and want to talk about it. Many of these conversations are 15-20 minutes. If it’s related to a professional skill they have, then I may make an introduction later if there is a fit and mutual interest. But up front I am explicitly asking for a favor. If it’s directly in their area of expertise and it’s more than 15 minutes, I will generally offer to pay their regular rate just to keep things clean.

Crossing the Boundary Between Free and Paid

  • If it’s a friend I tend to resist making them a client and prefer to either provide free assistance or suggest someone else they can work with.
  • If it’s more of an acquaintance and they are explicitly offering to pay me then I tend to start with some very small projects and see how it works out.

I think if friends are asking you for advice it’s a sign of their respect for your insights and experience. I would not read too much negative into them not offering to pay you. I think it’s a mistake to do business with close friends. The Arabs have a proverb: “love one another as brothers but do business as strangers,” and there is some merit to a more professional distance.

I started a consulting business in 1995 and found this “doing business with friends” to be a very tricky area to navigate. I guess I settled on “I ask friends for favors, and pay them if I am engaging them directly in a professional capacity.” Unless they explicitly tell me they want to pay me I assume they are asking for a favor and treat it as such, being generous with my time and making appropriate introductions where I can. It’s what I would expect of them if I asked them for a favor.

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