Starting a business venture can be tough and stressful. That’s why starting one with your friend can seem like a dream come true. After all, you are already friends so clearly you already get along, which ultimately makes it a lot of fun and takes away the anxiety of working with new people that you don’t know very well yet.
What’s more, you are already conversant each other’s strong and weak points so, it doesn’t seem like anything could go wrong, right? Wrong! I don’t mean to rain on your parade here but take it from someone who’s already tried this a few times; starting a business with anyone, let alone a friend could go really bad, or really good.
The first thing that you should keep in mind is that starting a business with a friend automatically changes your relationship, especially during working hours. You will need to address each other with less familiarity, especially if you are leading a team of employees.
When dealing with someone with whom you share a close personal connection, emotions can often get in the way of doing proper business, resulting in bad and unprofessional business practices. It is very important to separate your personal feelings from the job, hard as this may be to do with your friend, if you want to run a professional and successful business together.
However, don’t let this deter you from getting into business with a friend. It can be done and has been done successfully. I scoured the internet looking for advice from people who run successful businesses with their friends and seem to have mastered the art of combining the two, well.
Here is a compilation of some of the tips I got from them on what to do and what to avoid doing when you’re starting a business with a friend.
If you and a friend are looking into starting a business venture together, here are some handy points that you should consider practising.
1. Communicate Constantly
Just as in personal relationships, communicating often is important in business partnerships. Keep the communication open and avoid assuming that you both have the same views regarding various aspects of the business. While this might be true in your personal relationship where you mostly do things the same way and often agree on almost everything, this might not be so when it comes to business.
Keeping clear and open communication channels will ensure that you are both reading from the same scripts to avoid confusion which could in turn lead to grave losses in your business.
When there is clear and constant communication, especially about sensitive matters such as money, you are each able to ensure that the other is doing what they are supposed to do and doing it when it is supposed to be done to ensure the growth and success of the business..
2. Do establish clear roles from the beginning
This is just as important as point number 1. Define your job titles and responsibilities clearly at the very start of your business venture. This will ensure smooth running of your company as well as reduce the risk of confusion, overlapping of duties,and potential power struggles, as your business rises to greater heights.
Many friends tend to take this point for granted when starting out and later regret it when their business venture becomes popular or when it gets faced by challenges, when they start to fight over who was supposed to do what and who’s fault it is that this or that didn’t get done well or on time and who should be responsible for fixing a screw up.
In the end, this becomes the very thing that could bring down their successful business, and ruin their close relationship.
3. Do get your business plan in writing
Every successful entrepreneur will tell you that writing a business plan is a must do when starting a business whether alone or with a friend.
You may tend to ignore this point when starting a business with a friend seeing as you have had the required, initial conversations regarding what you’re looking to do businesswise, and seem to have similar views.
While many successful business owners agree that having these preparatory conversations is a great way to start, they should not be a substitute for a formal business plan.
As a matter of fact, many experts advise that you get a business lawyer to help you get your plan in writing.
It might seem like an unnecessary time-consuming undertaking and you could potentially get a little uncomfortable when discussing how the various possible snags that you might hit along the way might affect both the business and your friendship. However, once it’s done, then you have something to turn to in case of changes in the business or your relationship.
4. Create a clear exit strategy
This is just as important as creating a business plan is. Starting a new business venture can be tricky. You want to hope that it succeeds but we have to consider the possibility that it could fail.
Failure in a business can cause disorder and create a lot of bad blood between the founders.
A formal exit plan creates some order and helps make sure that a failed business doesn’t equal a ruined friendship.
Also, in case the friendship breaks for other reasons unrelated to the business, a written agreement and a legally binding exit plan with clear separation and buyout clauses will ensure the business doesn’t suffer as a result of the broken friendship.
Enlist the services of a lawyer, to make an agreement that defines everyone’s job description, goals, and expectations, as well as protects both parties. Once this is done, follow the business plan and hold each other accountable. Doing this guarantees success in the business as well as a healthy friendship.
What Not to Do
Now that we have looked at what you ought to do when getting into business with a friend, let’s look at the potential pitfalls that you need to watch out for to keep your friendship intact and your business thriving.
1. Don’t start a business with a friend just because you are friends
Unfortunately, the fact that you and your friend get along so well, doesn’t always automatically come into play once you start a business together.
Taking the first “Do” point, about having clear, constant and open communication will ensure that you and your friend work well as business partners.
Business separations, just like marriage separations can be, and often are chaotic. Consider doing your due diligence on your partners, whether they’ve been your best friend for decades, or the maid of honor at your wedding, knowing everything about your potential business partner before the onset of the business is very important.This will enlighten you on whether your friend will make an ideal business partner.
According to Bill Widmer, constant disagreements that often end in huge fights and the inability to have productive communication, is a big red flag that maybe you and your friend do not make good business partners.
2. Don’t make assumptions about anything
Do not assume that each other’s goals for, and commitments to, the business are the same even if you share similar values, tastes, experiences, and work habits. Sometimes these shared values may not always go hand in hand with your business goals.
You and your friend need to be in absolute agreement about what you want your business to achieve. You also need to understand that starting a business is a big commitment, which requires a lot of time and some sacrifice.
You both need to be clear on the time you’ll be required to commit to the business to achieve both the short, and the long term goals.
3. Don’t mix personal and business matter
When running a business with your friend, you need to put an emotional and logistical balance into place. Clearly separate your professional relationship from your personal relationship.
Separating your personal and business finances is a must do too.
As they say, business is not personal and so whatever happens to/in your business has nothing to do with your friendship, just as whatever happens in your friendship has nothing to do with your business. Obviously, this can be harder when running a business with a friend since there’s already an emotional attachment there.
To help you separate your personal and professional relationships, keep office matters in the office, and home matters at home. Keep your conversations with your friend/business partner on their proper sides. Try using text and personal emails for personal matters, and your business emails for matters related to business.
However, be careful not to trade your friendship for the business. Your friendship comes first so start the business with a clear exit plan in place to ensure that your friendship stays intact even if things don’t go well with the business.
Businesses can and do fail. But friendships can thrive if well tended and they can last a lifetime. So, reserve some time on your schedule for your friendship where you take some time away from the office and talk about anything other than business.