Thinking about starting your own business can be exciting, but it comes with so many questions. One question is whether you should run your business alone or with someone else. A friend, perhaps? Now while this may seem counterintuitive, there are many benefits to both sides. Of the 33 million small businesses in the U.S., about 27 million have no employees or are run by a single person. While there is nothing wrong with being a loner sometimes, running a business alone isn’t for everyone. You have to prepare and know what it takes.
Making the decision to start a business with a friend is one that you shouldn’t take lightly. Some relationships are damaged beyond repair because of individuals mixing business with friendship. That’s why it’s important to understand whether you can handle things on your own or if you should partner with your friend. In this article, we’ll help you get closer to figuring that out.
Should You Run a Business With a Friend?
Running a business with a friend can be enticing. Especially if you get along really well with that person. When you run a business with a friend you combine a trusted personal relationship with the excitement of entrepreneurship. The familiarity and understanding that comes from a longstanding friendship can be a strong foundation for a business partnership. It also helps that there are several types of businesses you can start with a friend. It almost seems like a no-brainer.
However, this blend of personal and professional spheres is not without its challenges. Friendships can be tested by the stresses and demands of running a business, where financial stakes, decision-making pressures, and differing visions for the company’s future can strain even the strongest bonds.
The dynamics of a personal relationship differ significantly from those required in a business context. Friendship alone does not guarantee business success; it requires complementary skills, shared goals, and the ability to separate personal issues from professional decisions. Therefore, it is vital to approach this decision with a clear understanding of the potential impacts on both your business and your personal relationship.
Things to Consider:
- Communication Style: How well do you communicate with each other, especially in stressful situations?
- Financial Goals: Find out if your financial expectations and goals align.
- Conflict Resolution: Have a plan for handling disagreements and business challenges.
- Roles and Responsibilities: Clearly define each person’s role in the business to avoid overlap or confusion.
- Exit Strategy: Agree on a plan if one of you decides to leave the business.
- Legal Agreements: Draft formal agreements to outline business structure and personal liabilities. This will help you protect yourself when going into business with friends.
1. How Well Can I Manage My Time?
One idea that is most appealing to entrepreneurs is being in charge of their own schedules. They define what task gets done first and what can be put off until later. They define what days they take off and for how long. At some point, you have to ask yourself, how good are you really at managing your time? Do you know how to keep yourself in a productive mindset? Do you know how to prioritize tasks?
Additionally, you have to remember running a personal show can become challenging to handle when you are the one responsible for getting everything done. How will you manage it? Do you do well under pressure? Many people fail to consider these questions until it is too late. They find themselves overworked and stressed, leading them to give up.
When you have a business with a friend, time management is still a challenge but easier than when you’re running a business alone.
2. Where Are My Areas of Expertise?
One person can only do so much. There are plenty of resources out there to teach you to do just about anything. Should you learn how to meet all of your business’s needs on your own, or should you learn to seek another’s expertise? Ever heard the expression, “A jack of all trades is a master of none, but often better than a master of one.” So, let’s dissect that a bit.
While knowing many things can make you a master at none of them, knowing more than one thing can be beneficial. There has to be a balance. Don’t overwhelm yourself if you don’t have to. It’s good to know and be good at many things but is it really what’s best for your business?
3. How Well Can I Evaluate My Own Ideas and Plans?
When it comes to building a business, many can get a little over their heads with ideas. Sometimes, people tend to think all their ideas are great when they may not be and end up finding out when it’s way too late. It can be a good idea to have someone to run your ideas by or have someone that will give you new ideas. Feedback is one of the key points in marketing and can become crucial to the business. Having a friend to run ideas and projects over with is always helpful.
Disagreements can be one of the main reasons people don’t like to bring others into their business. There will be times when seeing eye to eye will be difficult, and coming to an agreement will seem impossible. Ask yourself, “Am I someone who can handle a disagreement?” Does your friend have these skills as well? Take these things into consideration.
4. How Much Can I Invest?
The capital you put into becoming a business owner can sometimes be overwhelming. There are many expenses to consider, from licensing to finding merchandise and maybe even finding a location. When you have a business friend along, they can share that responsibility with you. Having someone else invest capital into a business can take some pressure off you and make the situation more bearable.
While this is a good option, consider that you will have to split it with your friend once you begin making a profit. Ensure that this is something you are comfortable with and that everything is set up properly to avoid financial and other disputes.
5. Can I Handle 100% of the Pressure?
When running a business, there are many pieces to manage like getting started, looking for good vendors, buying products, financing, marketing, and managing a website. It can become a lot for one person to handle, and you might end up thoroughly disliking your business at some point. No one does well when they are stressed and overworked, especially at the beginning of a business when there may not be a lot of money coming in, and you haven’t put yourself on the payroll.
Delegating work to others makes things easier and removes some of the pressure you feel. Whether you have a business partner or hire a freelancer, it’s crucial to have a balance in your business. If the boss is too tired, things aren’t working at the maximum potential that they could be.
When running a business with a friend, you can share both the workload and the pressure. When responsibilities are shared, you only need to be overly concerned with what you are responsible for. For example, if you are the Chief Operations Officer, and your friend is operating as the CEO, you may be concerned with the company’s financials. However, you know that your friend is the one who needs to find the right CFO to manage those responsibilities or find solutions to those issues.
This is the same for a smaller business. One friend could be responsible for the website while another could be responsible for fulfillment. The friend responsible for the website may be stressed about possible fulfillment issues and can support their friend in handling them. But ultimately, it is the friend that is responsible for fulfilling orders that may feel the pressure.
I know I’ve given you a lot to think about, but these are make-it-or-break-it factors in many start-ups. One study found that 20% of businesses fail their first year, which may very well be because of one of the five points I shared here.
Make sure you take a good look at your business plan beforehand to decide what route will be best for you and your business’s success. You can do it on your own, bring on a friend, or do it on your own and delegate tasks to freelancers. Your time, energy, and focus are what will determine the success of your business.
This article was first published in 2021 but has been expanded and updated.