Starting a business with a friend can be incredibly rewarding. Instead of working for an overbearing boss and with colleagues you don’t really know, you get to spend time with someone you really like, respect and admire. And because they know you well and understand what makes you tick, it makes each workday that little bit easier.
However, there’s also a lot at stake. If you get it wrong, your new business could fail and a lifelong friendship could be ruined. So what are the pros and cons — and what should you consider before jumping into the deep-end?
“It's very exciting to start a business with a friend and it can be easy to be swept along by the camaraderie and enthusiasm,” says career coach Valerie O'Hanlon, of Clarence Consulting.
“It is important to ensure that there is an agreement between both of you,” she says. “There are definitely advantages, including having someone to share the load, someone who knows you well and will be supportive, and someone to bounce ideas off.”
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Collaborating with a friend can also be a huge boost to your creativity and also create a form of checks and balances too, says career expert Matthew Warzel, president of MJW Careers. “You always have someone who's also thinking about the same stuff. That can create multiple strategies, and offer some opportunity for A/B testing,” he says.
The more time you spend with someone, though, the more pressure it can create in a relationship. And if you’re setting up a new business, it’s likely you’ll be putting in long hours and late nights together. “You may find out that they have traits that you don't like or that are not helpful to the business,” O'Hanlon adds.
It’s also worth bearing in mind that starting a business with a friend may mean that your relationship changes too. During working hours, you’ll need to interact with each other a little more formally than you would if you were just hanging out normally. You may be close, but it’s important to make sure this doesn’t lead to sloppy business practices. Keeping things professional is essential if you’re going to make your company work.
So what should you do to set yourself up for success?
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Be transparent and communicate
Firstly, it’s important to be completely honest and transparent with each other. “Schedule everything and be transparent. Give each other homework,” Warzel advises. “Hold each other accountable. Share each other's network. Be honest. Be sincere. Be genuine.”
It’s also essential to communicate often and well. Setting up a business with someone you know well can often lead to complacency — after all, you know them inside out. Even so, it’s crucial to make things as clear as possible.
“Communication can shut down real quick, especially if there isn't a third party to approve or deny the vote,” Warzel Plus, once that relationship is harmed, it can lead to a deteriorating business, reputation, brand, and eventually your clients.
Plan all the details
Before you jump into any business ideas, clearly layout your roles, responsibilities and all the details regarding your finances and time. One of you may be fronting the business financially, but the other contributing more in terms of hours and networking connections. Setting out your expectations of each other is essential to avoid conflict or resentment.
“Like any business, you need a plan. Sit down and determine what your values are for the business, what's important to both of you,” O’Hanlon says.
“What will success look like for you both? Divide your responsibilities in terms of strengths. How much time will each of you give to the business, how much money will you both put into the business, how much money will you both take out of the business?”
It’s also important to prepare for as many different unexpected scenarios as possible. For example, what will you do if one of you becomes pregnant, or needs time off for health reasons? What if one of you is offered a job they want to take? What if your financial situation changes suddenly?
Of course, things change over time and there’s nothing wrong with that, but talking about these issues at the start of your journey can save you problems later down the line.
Have an agreement for disagreements
Finally, determine how you will resolve conflict or disagreements. It’s easy for emotions to run high when starting a new venture, but it’s even more likely if you’re close with your business partner.
“Talk about and decide how one or other or both exit the business if needs be. Beginnings are as important as endings — sort these things out at the very beginning,” O’Hanlon adds. “Be sure that you both value each other's strengths and abilities, and enjoy the ride.”
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