Starting a business with a friend? Six things to consider

biz with a friendYou’ve got big ideas, lots of enthusiasm and a friend who shares it all with you. Whether you’ve been mulling over the idea together for years, or you’ve pieced it all together in one particularly stimulating night at the pub, starting a business with a friend is worth some careful consideration. It’s a bit like a marriage – and like marriage, a business partnership that goes wrong can end in a ruined relationship, financial disruption and a whole lot of resentment.

About 50 per cent of start-ups have friends as owners, so you’re not alone. Some of these companies go on to thrive or even dominate the world (like Google). If done right, with the right person, there’s every chance you and your friend’s new business will flourish. Here are six things to consider before jumping in:

1. Make sure you have a shared business goal. Talk about exactly what each of you wants from the business. How will you measure its success? How much time can you each put into it? Don’t be scared to speak your mind. It’s important to air any differences in your individual visions at this point.

2. Use your friendship to your advantage. You’ve known this person for a long time. What are their strengths and weaknesses? How do they complement your own? This can help you both to decide who takes charge of what. And that said…

3. Play to your strengths. What can each of you bring to the table? Even if you’re both from the same field, it’s great if your friend has a different area of expertise so both of you can take charge of specific areas of the business, and contribute equally to its success. One of you might be a number cruncher, the other more a relationship builder. Clearly define each of your individual roles in the business.

4. Learn how to handle conflict. Conflict is inevitable in any relationship where two people are working closely together. Healthy debate is not a bad thing, but how will you resolve disagreements and make decisions? Discuss the criteria each new decision has to comply with. Keep each disagreement in perspective, and don’t let it burden other aspects of your work or relationship, or you’ll be bickering all day long – you’ll see the resentment breed!

5. Have a written agreement – kind of like a pre-nup. It might be painful and tedious to have to go through all this with a friend, but it’s the most powerful prevention strategy for future legal problems. What should happen if one of you wants to get out? How will you divide assets? What if one of you needs parental leave? Make sure you get some legal advice at this stage. It might save you a huge headache down the track.

6. Keep your professional and personal lives separate. Set aside time outside of work to have fun, and avoid talking about work. You were friends before this, and there’s no reason you can’t keep doing the friend things you used to do. Don’t worry, though, if you start to spend less time with each other outside of work. Time apart is healthy.

Is it possible to launch and grow a successful business with a friend? Do you have any tips for keeping your work life and your friendship separate? Let me know in the comments section.

 

Comments

  1. Great advice. Deciding whether to be in business with a friend or family member is serious decision and one many people don’t take the time to really consider. The first handful of people in your business can make or break your business. When they’re a family member or friend, there’s even more to lose if the relationship gets difficult.

  2. I love all these tips! Personally, I would put number 5 — have a written agreement — as No. 1. It helps keep things nice and clean and clear to all parties. Same holds true (maybe double!) when starting a business with a family member. Thanks for laying it all out.

  3. All great tips! Too many friendships are destroyed by becoming business partners and not having terms clear!

  4. I went into business with my daughter because we both loved creating our product. Never gave any thought to these 5 areas. Now, 6 years later am learning what a difference it could have made.

  5. Sonya says:

    Working with anyone else just isn’t for me, but have seen other successful friendships on business. I think I’d break a friendship!

    • Vicky Savellis-Grant says:

      Yes I agree it’s not for everybody. But with the perfect partnership it could work well for all. Thank you Sonya.

  6. Beth Niebuhr says:

    I’m not brave enough to do it but those ideas seem great.

  7. Yakini says:

    This is very good and very important. I will definitely being taking all these points into account since I am a minority owner.

  8. Laurie Hunt says:

    The partnership agreement is so important. We think we know the person well enough and can enter the business under a set of assumptions that we ‘assume’ the other person holds. Then trouble happens and neither person can understand why. The agreement can even include how to handle conflict and some the relationship aspects that we so often don’t talk about. Thanks Vicky for your article.

Speak Your Mind

*