An image of two Navy Seals standing in water with guns in hands.Navy Seals know a thing or two about building productive teams. A key principle of their productivity is the “buddy system.” But what works for our Navy Seals can cause problems in a business setting. 

Mike (not his real name) and I had been good buddies since high school. He graduated from pharmacy school the same year I graduated from law school. Though we were taking different career paths, we wanted to find a way to do something together in business. We decided to buy a 5-unit apartment building. We co-signed the loan, made the purchase, and launched our careers as aspiring real estate moguls. 

Since the apartment building was closer to me than Mike, I ended up doing most of the work, including interface with tenants, scheduling repairs, etc. I didn’t mind carrying a bit of an extra load. I enjoyed it and I knew Mike was busy with his new pharmacy.

That’s how buddies are supposed to work. When going through Navy Seal training, each trainee has a buddy (another trainee). When diving in murky water, skydiving at night, or swimming in shark-infested ocean waters, your buddy is there to help you and you are there to help your buddy. You don’t let him down and he won’t let you down. 

In business, the buddy system works great, until priorities change. One day Mike called to tell me his banker told him he had to get off the apartment building loan if he was going to get a loan to expand his pharmacy. In other words, Mike’s priorities had changed, and he needed my help by taking him off the loan. But to do that, I had to sell the real estate to pay off the bank loan. Our careers as aspiring real estate moguls ended about a year after it began. 

Mike made the right decision for his pharmacy business, but in doing so, he ended our plan to build a real estate business together. Though we didn’t end our personal relationship on a contentious basis, it was never the same after that. All we have now are memories of good times and dreams of what might have been.

It’s been a recurring theme of my weekly stories that friends doing business together is dangerous for the friendship. Based on decades of observation, I’m not a fan of business partnerships. People’s interests and objectives change, and that can wreck careers and relationships. A Navy Seal always wants and needs his buddy, but in business, your buddy might just become your albatross.

 

Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."