How to start a business with friends
Have you ever been with a friend or group of friends and the topic of starting a business came up? Perhaps you and your friends have 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 possible.
Before you decide to start a business with your friends, it’s important to know what you’re getting yourself into. Having a business partner who is also a friend can be great. It can be very beneficial to share your successes and overcome challenges with someone you truly care about and who cares for you.
But, working with someone you have a personal relationship with can also be challenging. Doing business with friends can put a strain on relationships. It might even end.
The perfect co-founders will complement each other’s skills and talents. They will put aside their pride for the good of the business and vision.
Although combining friendship with business can be risky, there are many examples of friendship-based businesses that have succeeded such as Air Bnb, Tasty, Ben and Jerry’s. etc. Unfortunately, several others did not end well.
Any relationship, professional or personal, thrives when certain aspects exist. Maintaining trust, respect and mutual respect can mean the difference between celebrating business success with your friends or trying 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 with whom you can work well
Starting a business with friends always seems like a good idea if you have a good friendship. But, in a business context, being friends should be followed by the ability to work effectively together.
Friends you have worked with in the past are good candidates for business partnerships. With friends who are or have been colleagues in the past, you have a better idea of their work ethic and work ability. If you are the type of person who likes to start work on time and your friend tends to show up late for work, this could be a source of 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 dealt with adversity in the past?
- What are their strengths?
- Can they separate personal life and business?
2. Establish roles and job titles from the start
It feels natural to be more cooperative in all situations when conversing with friends. However, the responsibilities of all partners must be very clearly defined. This way you can avoid conflicts and misunderstandings.
Before you go into business with your friends, you should outline the role each person will play. This means establishing who will manage operations, finance, marketing, decision-making and other important functions.
These decisions and assignments should be based on each person’s strengths and abilities, not what each person “wants to do.”
Establishing clear roles when something is not being done will help prevent problems and arguments. This will help each person focus on their work without feeling the need to take on multiple roles.
3. Make it legal
Asking a friend to sign a contract or other legal document is like asking a fiancé to sign a prenuptial agreement. This is usually not a pleasant conversation and can imply a certain level of mistrust.
However, when starting a business with friends, we should not rely on our emotions alone. Before you start a business, you must protect yourself with a thorough written contract that addresses every conceivable scenario.
For example, talk to a lawyer and create the right business structure. Address questions such as; “What happens if a partner decides to leave? How do you value your company? What happens if your partner dies?
Write down everyone’s job description, objectives and expectations in the contract, just as you would for any other employee. You can only succeed as a friend and business partner 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’s easy to assume they know what’s on your mind. Conversely, you may think you know what they think about a particular issue or project.
This is where the communication gap occurs. When running a business with friends, about everything is important. Confusion breeds silence. Set aside time each day to communicate and discuss any issues within the business.
This is the most important thing to remember because business miscommunication can lead to catastrophic losses.
Quick Instructions: If a problem takes two or more emails to resolve, pick up the phone and discuss it over the phone. It eliminates all confusion and saves time.
5. Setting boundaries
Setting boundaries is an important way to create work-life balance. For example, before starting the business, your friend may have called you at night to talk. However, if that same friend now calls you at night asking you questions about invoicing, your work life and personal life are now overlapping.
This overlap is one of the main causes of entrepreneur burnout. Set up rules for when personal conversations and business conversations can happen
With friends serving as business partners, setting boundaries can be difficult. Before any issues arise, clearly outline the boundaries that you and your partner must adhere to.
Remember office is office and home is home. It is important to distinguish between personal and professional. Your interactions with your best friend/colleague should be on the appropriate side of that boundary. Use text messages and personal emails for personal communication and business emails for office work
6. It’s not always about business
Don’t hesitate to tell your partner that you need a day off, a weekend off, or even an extra long lunch break to clear your mind and relax, especially when things are busy and you’re driving each other crazy.
You don’t need to ignore your passions to set business priorities. In reality, the business failed. But if you give your friendships the time and attention they need to grow, they can last a lifetime. Plan to take time out of your busy schedule to talk about things other than work, or better yet, spend the weekend together.
Sometimes, it makes sense to start a business with your friends. Starting something from scratch and watching it grow is a fantastic experience, and it’s even better when you can do it with people you love. While it’s not always easy and your friendships can sometimes work against you in business, if you keep this 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 feel when things get tough for your business growth and development is not possible without some extra help. You don’t want to leave the success of your business to chance.
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