The ultimate question: Could you and your friend make the perfect business duo? The answer may be more complicated than you think. You love spending time with your friend and the idea of becoming entrepreneurs together. Why not fulfill your dreams with each other? Companies like Airbnb and Ben & Jerryâs had success in this area â they all started from friendships.
But much more goes into starting a business with a friend. You may make great business partners, or you could wish you had taken your venture solo. Before making any financial decisions, analyze the pros and cons and ask hard questions. For example, will you equally invest? Who will take on which tasks and responsibilities? Sift through the easy and hard questions to see where your business friendship lies.
To help you and your friend make a confident and informed decision, skip to our flowchart or keep reading.
Questions to Ask Before Going Into Business With a Friend
Before jumping into your business plan, ask the hard questions. These can be tough to ask and answer, but they could save your friendship from a business relationship gone sour.
Question 1: Do You Share the Same Values?
Depending on your life stage and goals, your values could differ greatly from those of your potential business partner. You may appreciate living a relaxed lifestyle that gives you the financial freedom to do what you love, while others may value a fast-paced lifestyle filled with activities and long workdays. Differences in values could spark tension in your business relationship.
Ask yourself: Do you and your potential business friend have the same values? If so, great! If not, note your differences and if theyâre worth working through.
Question 2: Do You Share the Same Business Goal?
To make sure youâre on the same page, schedule a brainstorming session with your friend. Map out your one-month, six-month, one-year, and five-year goals for your startup. Is your goal to make a certain amount of revenue? To hire a certain number of full-time employees? Or to take your business idea global?
If you have the same intentions, move on to question three. If any of your goals contrast, there may be trouble in paradise. See if you can work through your differences before investing your time and money.
Question 3: Do Your Skills Complement Each Other?
You and your friend each have your own strengths For example, you may be good at time management while your friend is better at sales. For skills youâre both lacking, think about how youâll fill in the gaps. If you and your friendâs startup plan has a budget for hiring freelancers, or one of you has the dedication to learn something new, this may not be a concern. No matter what, especially if youâre bootstrapping your business idea, itâs essential to talk through it.
If you donât compliment each otherâs needed skills, who will step up and learn them?
Question 4: Do Your Career and Lifestyle Habits Align?
Depending on your business goals, this could be a make or break question for a professional partnership. For instance, one friend may be a morning person while the otherâs a night owl. One can take over morning meetings and emails while the otherâs responsible for evening website development and customer service.
If one friendâs lifestyle habits donât suit the other, it may be best to opt for other business opportunities. While starting a business could adjust your habits, itâs easy to fall back into old ones from time to time.
The Pros and Cons of Doing Business With Friends
Before entering any business arrangement, itâs reassuring to weigh the pros and cons. Could your new business idea benefit or hinder your future relationship and career?
Pros: You Have a Friend Through the Ups and Downs
Starting a business with a friend is similar to marriage â youâre there for each other through the good and bad. Whenever youâre having trouble, you know who you can go to for help. And youâll be able to do most tasks together. For example, approaching investors as a team vs. going solo could put your nerves at ease.
Cons: You Know the Same People
Instead of getting together for your weekly catch-ups, you could spend all day together! While this can be exciting, it can also be hard to leave work at work. When you both hang out with the same people, there may be little room to disconnect from each other and your business.
Pros: You Understand Each Otherâs Strengths and Weaknesses
You likely already know how each other operates and your strengths and weaknesses. Instead of learning the way a new business partner functions, you already have the upper hand. On day one, you and your partner could delegate tasks that fit everyoneâs strengths best.
Cons: Your Friendship Could Turn Strictly Business
Your current friendship can be hard to separate from your new work partnership. Taking your work too seriously could stiffen your current relationship. Even after your workâs done, âfriendâ time may slow down. To have the best of both worlds, over-communicate throughout your entrepreneurial adventures.
Pros: You Feel Comfortable Communicating
You may have been friends for months, years, or even decades. Having a strong friendship foundation helps bolster your communication in the workplace. Plus, you most likely know how your friend may react to a situation gone wrong. Take note of your friends’ communication habits and foster them throughout your business relationship.
Cons: Itâs Easy to Let Emotions Get the Best of You
Be careful not to let your emotions dictate your business decisions. A situation could happen in your friend group that makes its way into the office. To avoid any personal matters in the workplace, come to an agreement â no drama. If situations arise, take some time off to clear your mind, rest, and come back more motivated and inspired.
Pros: You Get to Spend More Time With Each Other
You get to spend countless hours talking and doing business activities together. You could spend all day tackling business tasks and wrap up the workday chit-chatting about your lives. Itâs an amazing opportunity to spend more time with your friend without letting other responsibilities slip through the cracks.
Cons: Friendship Failure Could End in Financial and Business Failure
When tension builds in the workplace, it could damage your business outcomes. Not wanting to attend a meeting with your partner could halt business productivity, or worse, end it. To avoid losing profits on your friendship and investments, you should both outline an exit plan if things go wrong.
Tips for Starting a Business With Your Friend
Before toasting to your other half and investing in your passions, properly prepare yourself. Show up to your new business like you would a new job. Have your plan documented before building your business empire.
1. Nit-Pick Your Business Plan
Small issues could grow months or years after starting your business. To avoid future problems, talk through small and large inconsistencies with your partner. Having different lifestyle habits may not be an issue now, but could be difficult after a year of working together.
2. Communicate Often
About one third of projects lack proper communication. Avoid project or business failure by finding a communication method that works for you and your partner. Daily catch-up meetings or weekly email updates are a few examples. Make it enjoyable by sipping your favorite coffee or eating your lunch while playing catch up.
3. Establish and Honor Boundaries
Eliminate tension in the workplace by setting a rubric for working hours. Avoid talking about personal matters until you step away from your work tasks. If you and your partner need to establish additional boundaries, clearly outline them as they come up.
4. Make it Official With Contracts
Once youâve worked through any complications, put it all in writing. If things were to go wrong, documents and written statements can be referenced in court. To do this, contact a lawyer and draft up a business plan. Any business promises you make should be in writing for any miscommunications. Compensation rates, profit shares, investment contributions, and business accounts are a few things that should be listed on this document.
Before investing your time, energy, or money into your startup dreams, make sure youâre fully prepared. Could you and your friend be great business partners? Take our quiz below to find out. Donât forget to keep track of your budget and investments throughout the startup process.
Starting a Business With a Friend: 4 Things to Consider appeared first on MintLife Blog.