Have you ever been with a friend or a group of friends and the topic of starting a business came up? Perhaps you and your friends discussed how exciting it would be to run a successful business. Maybe that conversation led to an actual business idea that you and your friends realized was feasible.
Before you decide to launch a business with your friends, it is important to know what you are getting yourself into. Having a business partner that is also a friend can be great. It can very beneficial to share your successes and overcome challenges with someone who you genuinely care for and who also cares for you.
But, it can also be challenging to work with someone who you have a personal relationship with. Being in business with friends can put a strain on the relationship. It can even cause it to end.
The perfect co-founders will complement each other’s skills and talents. They will put their egos aside for the good of the business and the vision.
Even though combining friendships with business might be risky, there are many examples of friendship-based businesses that have succeeded like Air Bnb, Tasty, Ben and Jerry’s. Etc. Unfortunately, several others have not ended up well.
Any relationship, professional or personal, thrives when specific aspects exist. Maintaining trust, respect, and a mutual vision can mean the difference between celebrating business success with your friends or attempting to balance both personal and professional relationships with them.
In this article, we will outline how to successfully start a business with friends.
1. Pick Friends You Can Work Well With
Starting a business with friends always seems like a good idea if you have a good friendship. But, in the context of business, being friends should come second to the ability to work together effectively.
Friends who you have worked with in the past are good candidates for a business partnership. With friends who are or were past co-workers, you have a better idea of their work ethic and work capability. If you are a person who likes to start work on time and your friend tends to show up late for work, this may cause a conflict if you decide to start a business together.
To get a better idea if you and your friends are “work compatible”, here are some questions you can ask yourself.
- Are they reliable?
- Do they have the same goals?
- How do they handle criticism or coaching?
- How have they handled adversity in the past?
- What are their strengths?
- Will they be able to separate personal life and business?
2. Establish Roles and Job Titles from the Start
It feels natural to be more collaborative in all circumstances when interacting with friends. However, all partner’s responsibilities must be very clearly defined. You can avoid conflicts and misunderstandings in this way.
Before you go into business with your friends, the roles each person will be playing should be outlined. This means establishing who will be handling operations, finances, marketing, decision-making, and other important tasks.
These decisions and assignments should be based on each person’s strengths and capabilities, not what each person “wants to do”.
Establishing clear roles will help prevent issues and arguments when something is not being done. It will also help each person focus on their job without feeling like they need to take on multiple roles.
3. Make it Legal
Asking a friend to sign a contract or any other legal document is like asking a fiancée to sign a prenuptial agreement. It is not usually a pleasant conversation and it can imply a certain level of mistrust. However, going through the legal process with help you protect yourself when going into business with friends.
However, when starting a business with friends, we shouldn’t rely on our emotions alone. Before you start a business, you must protect yourself with a thorough written agreement that addresses every imaginable circumstance.
For example, speak with a lawyer and create the correct business structure. Address questions like; “what occurs if one partner decides to leave? How will you determine the worth of your company? What happens if your partner dies?
Write down everyone’s job description, objectives, and expectations in the agreement, just like you would for any other employee. You can only be successful as friends and business partners if you get everything in writing.
4. Communicate Often
Communication is important in every type of business relationship. This is even more important when working with friends. When working with friends you know well, it is easy to assume they know what’s in your head. Conversely, you may also think you know what they think about a particular problem or project.
This is where communication gaps happen. When running a business with friends, it is important to about everything. Confusion is bred by silence. Set aside time each day for communication and to discuss any issues within the business.
This is the most crucial point to remember since business miscommunication can result in catastrophic losses.
Quick tip: If it takes two or more emails to address a problem, pick up the phone and discuss it on the phone. This eliminates all confusion and saves time.
5. Establish Boundaries
Setting boundaries is an important way to create work-life balance. For example, before starting the business, your friend may have been able to call you at night just to talk. However, if that same friend now calls at night to ask you questions about invoicing, your work life and personal life are now overlapping.
This overlap is one of the main causes of burnout in entrepreneurs. Set up rules as to when personal conversations and business conversations can happen.
With friends serving as business partners, setting boundaries may be difficult. Before any issue emerges, clearly outline the boundaries you and your partner must abide by.
Remember that the office is the office and the home is the home. It is vital to distinguish between the personal and the professional. Your interactions with your best friend/coworker should remain on the appropriate sides of that boundary. Use text messages and personal emails for private communications, and business emails for office work.
6. Don’t Make it Always About Business
Don’t be hesitant to tell your partner that you need a day off, a weekend getaway, or even just an extra-long lunch break to go clear your thoughts and relax, especially when things are hectic and you’re driving each other crazy.
Setting business priorities doesn’t require you to disregard your emotions, either. In reality, businesses do fail. But if you give your friendships the time and attention they need to grow, they can last a lifetime. Plan time out of your busy schedules to talk about subjects other than work, or better yet, spend the weekend together.
Sometimes, it makes sense to start a business with your friends. Starting anything from nothing and seeing it flourish is a fantastic experience, and it’s even better when you can do it with people you like. Even though it’s not always easy and your friendships might sometimes work against you in business, if you keep that in mind and take the proper precautions, you’ll be in a great position to succeed.
You can always talk to your friends about how you’re feeling when things get tough for your business to grow and thrive in ways it couldn’t without some extra help. You don’t want to leave your business’s success to chance.