Brainstorming business ideas with friends is a lot of fun. Years of loyalty, compatibility, and shared interests can indeed make it seem like your friends are great prospective business partners. While it’s tempting to take your entrepreneurial spirit from the living room to the boardroom, doing so with a friend by your side could be riskier than you might expect.
Starting a business is never a simple endeavor. While it’s easy to assume that doing so with your friend by your side could offset some of the stress associated with launching a new company, the partnership could actually put your relationship in jeopardy. Close, personal friendships often result in sloppy business practices, too.
This isn’t to say you can’t start a business with a friend. Instead, take this as a learning opportunity about all the things that can go wrong. A little foresight can go a long way in preventing breakdowns in communication. Consider these factors before going into business together:
Expertise, Experience – Or a Lack Thereof
A carefully selected business partner can bring tremendous experience and expertise to any new venture. A good friend can bring loyalty and enthusiasm. By sacrificing experience for passion, your business could be entering the market at a serious disadvantage. Before partnering with a friend to launch a business, consider each of your strengths and weaknesses.
Do you have business experience? Has your friend ever run a company before? What organizational blind spots are you potentially overlooking? Can you bring on another partner to help counterbalance your inexperience in business? The answers to these questions must be addressed before you officially launch your new company. Fail to prepare, and your venture could be over before it begins.
Shifting Roles and Priorities
There can only be one CEO of an organization, just as there can only be one head of sales, head of product, and so on. Knowing your strengths and weaknesses can help you and your friend determine who should be in charge of what. If you can’t have frank conversations about potentially touchy subject matters like equity, job descriptions, titles, and salaries, it’s probably not a good idea to go into business with that person.
The longer you put off such conversations, the more difficult they are to have. We’re taught from a young age to share and make compromises with our friends. If you’re having to run every business decision by your friend before making a choice, your new company could be bogged down by bureaucracy before you ever truly launch. If you decide to go into business with a friend, make sure your roles and priorities align.
Shared Expectations, Risky Assumptions
It’s fun to spitball pie-in-the-sky daydreams about going into business together. Even when you’re on the same page about your goals, however, you might not be as aligned on how to get there. Many friends and family go into business together, making many assumptions about their partners’ contributions. For a new business to succeed, everyone has to be in total agreement about what you want to achieve.
On top of that, it’s important to be in alignment with business priorities. Required time commitments, for instance, can be a huge pain point for friends going into business together. From the beginning, have a clear discussion about how many hours a week each person can contribute. Discuss sweat equity, long-term milestones, and what everyone will need to put into the organization to find success. By communicating these goals early and often, friends may have a real shot at achieving their goals.
Business with a Friend: Mixing Business and Pleasure
One of the riskiest aspects of going into business with a friend is the potential mixture of business and friendship. What sounds fun in theory can quickly turn into an emotional and logistical balancing act. It’s often said that business isn’t personal, but when you enter into a professional relationship with a friend, the lines are bound to get blurry sooner or later.
To combat the potential for blurred lines, try keeping your professional conversations and meetings separate from social plans. Rely on text messages and personal emails to organize your annual Fourth of July barbecue and stick with your business email to strategize about your new product launch. While the advice may seem like common sense, you’d be surprised at what a challenge it can be to keep these conversations separate.
Putting Your Friendship First
It can be hard to imagine, but there may come a time when what’s best for your friendship is in direct opposition with what’s best for your business. Being your best friend’s business partner fundamentally changes the dynamic. Thankfully, prioritizing your business doesn’t have to mean eliminating the emotional bond you share altogether. Instead, put your friendship first. Start your business with an exit plan in mind. Should things start to fall apart, you’ll feel confident knowing that you and your friend have each other’s backs.
The reality is that many businesses fail. If you put in enough time and attention into friendships, on the other hand, they can last a lifetime. Build time for fun into your busy schedules. Taking a weekend – or even just a lunch – where you’re talking about anything but business can do wonders to relieve tension. If you see yourself struggling with this kind of balance, it may not be such a good idea to go into business with a friend after all!
Are You Ready to Launch Your New Business with a Friend?
It’s true what they say: there’s no reward without a little risk. Going into business with a friend can be incredibly rewarding but doing so without the right partners and resources could be a recipe for failure.
If you’re looking for legal advice about your latest business venture, you’ve come to the right place. Make an appointment with the most trusted legal team around. Get in touch now and get the legal advice you need to kickstart your new business.
