A Guide to Starting a Business with a Friend
30/05/2021
It’s not unusual for business ideas to spring out of a brainstorming session between friends. If you’re both entrepreneurially minded and come up with a concept that really seems to fly, there’s no reason why you can’t pursue it. Apple, Google and Microsoft are all great examples of successful businesses that sprang from collaborations between friends.
However, working with your friends does come with its pitfalls. Shifting your relationship to a business footing will change the way you interact – and rightly so. You’ll need to make sure that your business is run professionally and that both partners understand their roles and responsibilities.
We’ve considered some important do’s and don’ts if you want your partnership – and friendship – to go the distance:
1. Communicate (a Lot)
Good communication is the key to every productive working and personal relationship. Problems can arise when friends go into business assuming they have the same goals, aspirations and work ethic. But what if office hours mean 8 am-6 pm for one partner and 10 am-4 pm for the other?
Misaligned goals can be the death of any partnership, especially if you let resentments settle and fester. If you can talk it out in the early stages, including expectations of working hours, investment capital and the division of duties will better your chances of being on the same page. Keep talking and sharing ideas, doubts and plans.
2. Clarify Your Roles
If you clearly define your roles and responsibilities at the outset, you’ll lay the foundations for a long-term working relationship that respects the input of each partner.
The temptation is to muddle along ‘co-owning' all the aspects of your operation, duplicating effort and getting under each other’s feet. Not only does it risk causing confusion but is also likely to undermine individual efforts along the way. By logically splitting duties – maybe one partner is responsible for marketing, while another deals with suppliers – each can take responsibility and fix things that go wrong.
3. Write a Business Plan
Mapping out your business’s future is essential – but even more so when friends are taking an important step together.
A concise business plan means you can cut through the excitement of starting your venture – and all the promise that holds – and make sure there’s a really firm strategy in place to support your dream into becoming a real and practical vision of the months and years to come.
A business plan will also force you to have discussions about the things that could go wrong and establish a plan to fall back on in case you hit a rough patch – or when one or both of you wants to call it a day.
4. Don’t Rely on Goodwill
Sometimes people are tempted to go into business together simply because they have a lot in common. But compatibility between friends doesn’t always result in a smooth transition to becoming business partners.
You need to start the right business with the right partner – you both need to have similar goals and aspirations and the ability to communicate productively even under pressure. Consider the personal and professional qualities of your would-be partner in the same way you would if they weren’t your friend.
This means you shouldn’t overlook their flaws and should think seriously about how their personality traits might play out in a business situation
5. Separate Your Personal and Professional Lives
While running a business with your best friend may seem like the perfect fit, you do need to separate your personal and professional lives.
A top tip is to keep business discussions strictly to office hours, minuting your discussions where possible to avoid misunderstandings. A brief start-of-the-week meeting with a list of actions and decisions can help to keep everything on track but ensure any niggles are quickly addressed to avoid resentment setting in.
Related Guides
Friends who are considering entering into a business relationship should think about it as the professional equivalent of a marriage. You need trust, respect and good communication to make it work.
This is why you need to know you can handle the difficult times as well as enjoying the fun stuff.
Do you know how much your business is worth? Check out our FREE and instant business valuation below!
Click Here to Use Our FREE Business Valuation Tool
Get quick and easy insight into the real value of your business, without any obligations.
At Intelligent, all of our experts use a specific formula that will give you a free and highly accurate baseline valuation so that you've got a figure to work with that most realistically resembles the value of your business.