Starting a business with friends can be exciting. However, that excitement can sometimes turn to frustration when business partnerships fail. known so far 70% of all established The business partnership ultimately failed.
Starting a business with a friend may sound like a great idea, but it rarely ends up going as planned. Even if your friend makes an excellent business partner, you should always be prepared for the unexpected. In this article, you’ll learn some ways you can protect yourself when trading with a friend
Starting a business with friends
The modern world of business can be very difficult and difficult to navigate, especially when you go it alone. Many entrepreneurs, struggling to meet market demand alone, decide to hire friends for help. While this can sometimes create a dream team, often things go awry.
Even if you feel confident that you and your friend can succeed, it’s always a good idea to be prepared and aware of potential problems. If you fail to create a backup plan and protect yourself – especially legally – you could end up being the one The economic climate, which may not be a good thing. Instead, stay on the ball and control your company’s success with a plan.
Protecting yourself when going on business with friends
There are many different things that can go wrong when starting a business with a friend, but there is also research that shows that friendships in business have some unique advantages. For example, Noam T. Wasserman, author of Founder’s DilemmaDiscovered that businesses founded by friends are more resilient in tough times.
Cut the full benefits that come with it Starting a business with a friend, you must first establish a solid foundation of trust and open communication. That way, you can prevent disasters before they strike rather than waiting for things to go wrong.
Use a business partnership agreement or operating agreement
Put your expectations and business plan in writing as soon as possible. This will protect you in case of future legal problems. Discuss openly what will happen if things go wrong and the business fails. It’s always a good idea to create a legally binding contract specifying these things in black and white and have all parties sign the agreement. You may want to consult a lawyer to make sure the contracts are properly executed.
A business partnership agreement or an operating agreement is the document that explains how the business will operate. Both documents will outline how decisions are made and how profits and losses are managed. The agreement will help in conflict resolution as it will also dictate how disputes are resolved.
Such as in case of an unfortunate incident Termination of business partnership with your friendSigning these agreements will help with the transition
We all know how important communication can be in our interpersonal relationships, but it is even more important in business. 86% of employees and executives identify poor communication as the leading cause of mistakes in most workplaces. You can save yourself—and your company—from experiencing those pitfalls by applying consistent, clear communication
Communication doesn’t always mean face-to-face meetings and catching up over coffee. There are several ways you can effectively communicate with your business partner(s). Here are some additional methods you can use:
- Email updates
- written message
- Contact app
- social media
- Phone calls and video meetings
You can communicate business needs and strategies using such online tools Google Drive, where you can instantly share, update and view files together If you don’t want to intertwine your business messages with your personal life, you can Download WhatsApp for free. WhatsApp is great for entrepreneurs. You can send messages, initiate audio and video calls, share files, locations and more directly from your cell phone
Make everything transparent
A big part of good communication is transparency. In a business partnership with a friend, transparency means that all parties have access to all financial accounts, ledger records, and other records. Making all accounts and records accessible to all partners will build trust
Assigning roles is a natural part of running a business to ensure that all processes run as smoothly as possible. All parties in the business should have a role, some responsibilities should be shared. Perhaps alternate accounting responsibilities will allow everyone to do their part. This will ensure that everyone has a chance to review everyone else’s work.
When you and your friend are discussing who will be responsible for which aspects of the company, make sure the respective titles and roles are clear, concise and realistic. But you should allow for some overlap so that one person does not have complete control over any one part of the business.
Discuss the worst case scenario
Many business owners worry that discussing potential problems leads to them actually happening. Not only is this untrue, but by avoiding those conversations you could be creating more problems down the road.
Even if the conversation is uncomfortable at first, you need to feel comfortable discussing the worst-case scenario with your business partner. Keeping your eyes open for potential risks is important for your idea to succeed.
If you don’t feel comfortable talking about failures and mistakes with your friend, maybe you should reevaluate your decision to do business with them.
Know your partner
You may be friends with your business partner for years, but how well do you know them? Even if you’re close on a personal level, that doesn’t mean you’ll always work well together. Your expectations of your partner may be tied to their personal nature, not their professional nature.
While a way to protect yourself Going to do business with a friend Making sure you can work properly with your partner’s communication style, habits and reliability. You may even want to consider a trial period with a business partner before fully committing, just to make sure their work style is compatible with yours.
Create a safety net
It is important to protect yourself and your own interests even when entering into business partnerships with friends. Remember that having a backup plan doesn’t mean you have less faith in your business’ potential. It means you are looking for your future.
Even when it’s smooth sailing for you and your friend, protect yourself and have a backup plan This can protect you from legal, financial or even emotional repercussions if the unexpected becomes reality. As they say, better to be safe than sorry.
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