Business with friends – Ouch

Hello readers, I am about to share something with you that occurred on Friday this week. But first let me reverse the tape and give you the entire background.

Me and my co-member Jonas started an agency with exclusive right to distribute a Austrian product called smartflower in Sweden, Norway and Finland. We found out about this product when we visited an energy fair about two years back and we were astonished how innovative this product was, due to design, effect and other functional areas. Both me and Jonas has a deep urge to change the way we produce and consume energy today in order to stay below the 2 degree Celsius limit. We find this issue being our times most devastating problem that needs to be handled: by politicians, companies and you and I, not just in Sweden but in the entire world. So we started a negotiation with the Austrian company regarding the contract and sent it back and forth between our lawyers and finally we came to an agreement, we got the unique distribution rights for this product in all the above written countries.

Let me clarify before you make any hasty conclusions. Smartflower is a stylish, innovative renewable source, however it will be more costly to install a smartflower than it would be to install roof PV modules. We are well aware about that. Furthermore due to Sweden’s low energy prices the payback time will also be longer than down at the continent. So we investigated how this product could make additional value to customers and realized that if we added the companies’ logotypes onto the pillar it will be a striking advertising space. And the world’s first branded smartflower got sold to Lantmännen and we are very happy about the outcome.

In addition, smartflower has some extra features, such as an integrated charging station for electric vehicles as well as battery storage so that the energy produced during the day can be used in the evening as well. The integrated charging stations has shown to be very appreciated among companies, for customer parking or even for employees to use.

Starting a new company will require a lot of investments in the early stages, whether you provide a product or a service. Our investments has so far remained quite low as our product is produced on demand so that we do not need a large warehouse which ties up capital. However, me and Jonas are entrepreneurs and realized in an early stage that we cannot carry this business all on our own and started looking for partners to relieve some of the tasks required. For instance we have no experience regarding installation and ground work such as build a concrete foundation to place the smartflower upon. This is where I realized that I have an old friend who works with exactly these thing and I presented the tasks we need assistance with. They were basically

• Store the smartflowers a few days before installation when they arrive after manufacturing in Austria
• Transport the smartflower to the installation location, if it is within Stockholm
• Install the smartflower and based on the surface make the best possible ground intervention to place the product on

I spoke with my friend and offered him a sum of money to complete those tasks. He presented the process to his boss who was on board and excited to try something “new”. We asked to sign a contract but the boss was skeptic regarding contracts and reasoned that he did not even write contracts with his largest employers. I thought – why not, he is my old friend and I trust him – Later to regret.

The first delivery arrived a couple weeks back, containing three smartflowers. Which by the way weights 690 kg and are 2,65 meters high – unfolded. Out of nowhere, my friend’s boss decides that he no longer wants anything to do with this project, and an argumentation started and we finally agreed that the first delivery was okay for them to store and install. This Friday the smartflowers had been there for a bit more than a week. When I got a phone call from my friend saying that his boss will throw out our smartflowers on the street unless we pay him even more for using the warehouse… and he wants it immediately. We were okay with paying some more, because so far we had a good deal that was even better than we first expected was possible, in addition we could not take the risk of him throwing them out on the street. So we gently paid and wish this will not occur again with our next partner – who by the way will be someone nonrelated and has a genuine drive to pursue these tasks.

So, what have I learned from this: starting a business with/including friends could will be fun if it works out or it could be devastating. In this case we thought we had agreed on a very favorable contact. But as time passed the only thing that closed our contract was an oral agreement between two friends. However, we were all insured incase anything would happen and if it would have to be taken further we would have the law on our side. As the oral agreement was binding and there were evidence.

So before wrapping up this extremely long post I have some additional pointers that I wish to share with the rest of you. Starting a new company is fun and challenging but how much you ever plan thing through there will always be something you miss, that will cost you time or in the worst case money. But if you tackle all obstacles that gets in your way you will get closer to your goal. Self-employment is a wonderful occupation but do not think for one bit that self-employment means freedom and that you can determine your own schedule. Now your service or product will be obligated to answer your customers’ needs at their preferred hours. But to me, even that is a wonderful feeling, someone needs something that I can provide, something that only I can do according to their preferred standards – Why else would they come to me?

Over and sun out!