Fresh out university or fresh out of a job, many people are inclined to start businesses with their friends, people they are close to or former schoolmates. Their reason to do this is because they want to start up with familiar faces that they assume are trusted.
Usually when decisions like this are made, many mistakes arise ranging from non-allocation of shares, unclear job roles, familiarity and unenthusiastic attitude towards real productivity. All these happen due to lack of acceptable opinions from a real neutral party.
Starting a business with a best friend can be a great way to start up, however several factors can ruin your business relationship hence the collapse of the business. You need to have strong reasons to determine the extent you can trust your friend, establish if they have skills they will bring on board, among other factors.
By being careful in your decision to start a business with a friend you trust or not, you can be sure of a less rough ride through your business partnership.
Questions To First Ask Yourself:
1). How Much Do You Trust Your Friend?
Trust is something very crucial in all walks of life. Before you hold a hot kettle, you first do soft touches on it to ensure it doesn’t burn your hands. Before you cook any meal, you first wash the cooking pan to be sure it is free of germs. Before a bank gives you a loan, they first do a background check on you and verify you have no bad credit history before they can trust you with their money. Before you are awarded with a business contract, the awarder first confirms that you have done similar projects in the past successfully and perfectly. The same applies to many areas of life, including the choice to start a business with a friend.
Before you start a business with a friend or anyone else, ensure that you can trust them to a greater extent. If you can trust them, then they may just be the right business partner for you.
2). Do They Have Skills Crucial To Your Business That You Don’t?
What complementary skills is your friend bringing on board? This should be one of the top priorities on your checklist.
Make sure you are not giving free shares to someone who would cause little or no impact in your business. Do not just partner with someone out of friendship emotions. Ensure that friend can complement the skills you have.
Measure the value your friend will add to the business and weigh it in terms of how it can determine the future of your business.
If you realize your friend would bring little or no impact at all in your business, then you better stay off as friends than business partners.
3). Are They Emotionally Intelligent?
How does your friend handle a crisis? Does he have any personal problems that could hinder the effectiveness of the company? Are they depressed almost all the time? Do you complain about almost each and everything they encounter?
Going into a business partnership with a friend who is emotional can be a very disastrous move. While it might seem smooth at the start, his/her weird emotions can burst again in the middle of your business journey, which would over time spoil your personal and business relationship.
If your friend is not emotionally intelligent, then you better cancel any plans to partner with them on any business. Any attempt to start a business together with such a person could eventually end your friendship leaving both of you with a failed company.
4). Can You Test-Run Your Partnership Before Fully Committing?
Instead of “running a business together”, test-run your partnership and establish if your friend can be a reliable business partner. Start something small without registering it as an entity or agreeing to be real business partners.
In the process of the test run, study your partner’s behavior. You will start to notice the real sides of your partner that you were never used to, and then start figuring out whether you can stand them or not.
If you notice your partner is highly emotional or has weird attitudes towards a business formula, or has issues identifying with designated business roles, you can conclude it is a right decision to end your business partnership before it finally reaches a point where your personal friendship would fall apart.
Why You Can Partner With Your Best Friend
1). You Can Fully Trust Them
A friend is a person you know, sometimes even better than their own parents. You know everything about them ranging from their dirty secrets, their behavior, their daily routines, the women/men they date and way more than their intimate lovers may ever know.
By having a deep understanding of your friend’s lifestyle and their behaviors, based on the number of years you have spent together with them, starting a business with them, especially your best friend, can sometimes be a good idea.
2). You Already Have A Great Relationship
You already have a strong connection since you have already been together as friends. Maybe you party together, hang out together, study together, travel together and so much more things together. There already exists a strong relationship enough for you to work together.
Relationships are very essential in the success of any partnership. Since you already have one with your friend, your business partnership should kick off with a smooth ride.
3). You Both Share The Same Beliefs And Convictions
You both stand by the same values. Probably dislike the same things. Maybe you are both hardworking and dislike lazy people. You generally share similar views on politics, sports, relationships, and so much more.
Entering a long business ride with a person you share common beliefs and convictions with, is not only crucial to the success of a business, but also to the success a marriage between man and woman.
With same beliefs, starting a business with a friend can be a well thought idea.
Here Are Strong Reasons You Shouldn’t
1). No Clear Acceptance On Who’s Really The Boss
In most cases when you do a business together with your friend, the titles given to each of you do not really matter. Since everyone is part of the business, it becomes a little difficult for one to take orders and tasks from the other as they would see it as belittling. This can spark an argument in the process leading to bitter fallout.
2). Too Much Familiarity Can Be Bad
Familiarity between business partners lets many things taken for granted. Because you have known your friend for a long time, trying to stop them from taking a bad business decision or something wrong can turn problematic
Having extensive knowledge of someone based on the experience and the time you have known them can become a problem in running a business. You need to be able to bring your faulting partner and let them know possible consequences of their actions and direct them to the right course of the company. But when a friend is involved, it becomes a little bit difficult to address.
3). A Break-Up In Your Business Relationship Can End Your Friendship
This is another reason starting a business with a friend you know deeply or have known all your life is advised against.
A simple fight between the two of you based on whatever reason, especially if the fight leads to the end of the business, will most likely end the friendship you have built for years.
Important Things To Do If You Still Want To Go Ahead With The Partnership
1). Setup A Clear Legal Structure
To ensure that your business isn’t tainted by your friendship, have clearly and legally signed business agreements. Duly register a company and have a clear allocation of share capital, employment agreement, founder’s agreement, a real board of directors that includes neutral parties.
By setting up a legal structure, it becomes easier to run the business and also avoids future fights when it comes to sharing profits made by the business.
2). Mix A Great Blend Of Professionalism With Friendship
When addressing your friend in front of other business partners or employees, make it official. Do not make others think they can too start taking some acts of professional conduct in office for granted.
When you act professionally with your friend at office, they get sense of seriousness while at work, then switch back to their casual ways when they are outside work.
3). Clearly State Each Person’s Role In The Business
Each partner should have an employment contract which clearly shows their roles in the company besides being just shareholders, and clearly state that a partner can be fired from their position if they fail to deliver according to their designated roles. Losing a position does not mean someone is no longer part of the company but means a more competent person could take over the position and drive the company in the right course.
4). Fix Personal Resentments As Soon As Possible
Of course your business journey with a friend may not be smooth always, certain resentments may come in once a while. Just in case an argument arises, the more emotionally intelligent party should resolve the issue as soon as possible before it escalates into a fight.
Sometimes resolving an issue you are clearly right on can be annoying, but for the greater good, you should take a step to ensure a bright future for the company.
Whereas there are good and bad events that could occur when you start a business with your friend, the final decision on whether to start together ultimately lies within you and your friend. If you are sure enough that you can make a difference where others have failed, then the two of you should take a step and work together. Otherwise it is better to keep your friendship through other means than risking it all by jointly starting a business together.
What are your thoughts about starting a business with a best friend? Let me know them by leaving a comment below.