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There are many times when business owners must make tough decisions. This includes partnerships where companies are managed by more than one person. In any business I owned with partners, I always played the role of the bad guy. Not every business owner wants to face the unpleasant parts that come with the job. 

Company presidents are responsible to lead and build. Their job is to provide a successful environment for employees, customers and vendors. Many first-time small business owners make friendships with all the people involved in their company. Potentially, these close relationships could result in financial harm, especially if any of these friendships prohibit an owner from terminating someone’s employment. 

Sometimes terminating employment with a friend is the wisest decision you can make.

Some business owners prefer to accept less profits rather than fire an employee with “just cause” simply because they don’t want to lose a friendship. They may not be able to handle the separation anxiety. Owners must learn they attract employees and contractors based on respect, not because they’re fun to be around. Leaders need to be friendly and kind to their employees without developing personal relationships. Being friendly without developing close friendships is a balancing act in the business world. 

Sometimes terminating employment with a friend is the wisest solution in managing a business. Before an owner terminates a person’s employment, they should check with a legal representative to understand the state’s separation laws governing the business. This is one step I took for every company I owned before I hired or terminated employees. Research both state and federal hiring and employment separation laws. Including those laws associated with discrimination. 

When negotiating with vendors, contractors, or mentors, know the termination clauses in any signed contracts. Business owners try to do business with other friends in an effort for mutual support. However, there may be times this relationship is not in the best interest for the profitability and longevity of your company. Business owners should have legal representation when negotiating contracts. Even with friends and family. They should not wait to terminate contracts where value is not received. Don’t hang on to vendors or advisors because they’re your friends. 

It is lonely at the top. In all the businesses I owned, I tried not to develop close personal relationships. I am very grateful I had a group of non-business friends who would take my calls and listen to my venting about my latest business challenge. 

Key Lessons Learned: 

• Understand that successful business owners will have to be the bearer of bad news, a requirement of a good leader. 
• Learn the hiring and termination laws of the state governing the business. 
• Know that laying off employees may increase the business’s future unemployment rates. 
• Check with an expert Human Resources consultant and legal advisors before hiring employees.
• Obtain legal advice when negotiating vendor contracts. Know the termination clause before signing an agreement.