Fresh out of college or fresh out of that unfulfilling energy sapping job, many people’s first instinct is to start a business with a best friend, a close friend, a romantic partner, or a former colleague. The decision to do so is often based on the desire to begin with familiar faces, trustworthy individuals, and a helping hand to cover many other aspects of the business.
When such decisions are taken, errors typically occur, from the non-allocation of shares to the incorrect recognition of the tasks of the job, over-familiarity, and a slothful attitude towards real productivity, due to lack of unbiased input from a real neutral party.
Although starting a business with a friend can be a good way to begin, there are several other variables that can destroy a business relationship. You need to have substantial reasons to decide how far you can trust your friend, to know if they have great skills to support your company, and a variety of other key factors.
By taking extra care before making a decision to start a business with a friend or close associate, you can be sure of a less bumpy ride on your business journey together.
You should take your time to resolve the following questions;
How much confidence do you have in your partner?
In all areas of life, trust is key. You do soft touches before holding a boiling water kettle so that you don’t get burned. You first wash or rinse the kitchen pot before you cook a meal to make sure it is germ-free. Before a bank can approve your loan application, they check to ensure that you have a good credit history and a viable company before they lend you their money. Before a company contract is entered into, the recipient confirms that you have successfully completed similar projects before they can grant it to you. The same applies to investors, including the start of a business with a friend.
Ask yourself if you trust your potential business partner, and to what extent. If you can, then you might have the right mate to do business with.
Do they have the skills that you don’t have?
Patnering with a buddy who has additional skills should be a top priority on your start-up checklist. However, you must be sure that you aren’t just giving away free shares to someone who has little or no influence on the proposed venture because you feel inclined to do so. First ensure that your business partner has complementary skills.
Make a detailed assesment to determine the value he/she will add to the startup and how this will positively affect the future of the business.
When you know that there would be little or no effect on the role of your partner in your company after a close examination, you better stay being friends than business associates.
How emotionally smart is he/she?
Before you go into a joint venture with a friend, consider putting them through an emotional assessment. Find out how they react to crises or stress situations. Do they have life problems that might hamper your business efficiency? Do they experience sudden states of depression or show visible frustration? Do they complain and give ceaseless excuses about every mistake?
Going into a business partnership with someone who has low emotional intelligence will likely end disastrously. While it may all seem good at the beginning, the quivering emotions of the individual will impact negatively on both the venture and your personal relationship over time.
You’re better off staying friends than being business partners if your partner is emotionally unintelligent. Any attempt to start a business together can end your friendship and may leave you both with a failed company.
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Before you invest fully, do some final checks
First evaluate if you can work together before defining the nature of your partnership. Start a business without registering an entity or agreeing to be partners. This will encourage you to balance the collaboration and make it easier for any Member to pull out (if they want to) before the business gets more formal.
In the course of the test-run, you can discover your partner’s sides that you weren’t used to, and also figure out a way to deal with their gimmicks. Particularly if your partner is very emotional, has uncomfortable attitudes towards a sharing formula, or has trouble recognizing the positions you have assigned, you will understand that it is best to end the business relationship before your personal relationship takes the fall.
The pros of partnering with a best friend
1. You can trust them fully
You know your best friend better than even your parents or romantic partner. You know their dirty secrets, their way of doing things in different situations, and their everyday routines. It can sometimes be a great idea to start a business with a friend, especially your best friend, through a deep understanding of their daily lives and constant behaviours based on what you have experienced personally over the years.
2. You have built a bond
Your time as friends has already established a strong bond between you. Since you have spent a lot of time together, your relationship gets more cemented.
Relationships are crucial to the success of partnerships, and since you have already established one, your business can sail more smoothly.
3. You share thesame ideals
Being friends in the first place means you have a lot in common. You probably don’t like the same stuff. Perhaps, you both work hard and don’t like lazy people. In economics, sports, friendships and more, you usually have similar views.
A long business trip with someone with whom you share the same values and principles is vital not only to the success of your business, but all other aspects of life. Working with someone who shares the same belief system can be a good advantage in business.
Here are good reasons why you shouldn’t.
The question of who is the real boss
The titles given to one another often don’t matter when you run a business with your close buddy.Since everyone is part of the business and has long known each other, directives or duties from the other party can seem trivial and give rise to disputes.
Too much familiarity is bad for business
Too much familiarity breeds unseriousnes. Because you know a friend for many years, when they make a poor business choice or do anything wrong, it might be problematic to stop him/her in their path.
Extensive knowledge of a person based on deep interpersonal relationship can be a problem in running a company. You must be able to call to order a faulting business partner, make them aware of the consequences of their activities and set them back on the company’s course. However, when a close pal is involved, such issues become harder to address.
A break-up can put an end to your business relationship
This is one of the main reasons why starting a business with someone you share deep friendship ties is highly advised against. Any disagreements relating to the business can lead to a crumble in the personal relationship that took many years to build.
Should you ever go into a business with a friend, here are a few things you should set right
Having gone through the pros and cons of starting a business with a close friend, you must have decided whether or not you still want to forge a partnership with your buddy. Here are some important things you should do if you want to go ahead with the partnership.
1. Set up a legal framework
Clear agreements should be signed to ensure your friendship does not damage the business. The business must be properly registered, the share capital explicitly allocated, have a founders agreement, a jobs arrangement, a real board of directors, including a neutral party, etc.
The legal structure makes it easier to start and run a business with a friend or more, and also prevents potential disputes relating to the sharing formula of the business proceeds.
2. Be friendly but stay professional
Make it official when you address your friend in your workplace in the presence of your other partners and employees. Don’t give others the opportunity to feel they too can start taking some acts of professional conduct in the office for granted.
By being professional with your friend at the office, they get a sense of seriousness when they’re at work. You can switch back to their pure casual state when it’s off work periods.
3. Clearly define the roles of each partner
Every partner should have a contract of employment which states clearly their function in the organization. Aside just being shareholders, all must be assigned definite roles and must be prior-warned of the consequences of falling short of their deliverables.
4. Resolve personal conflicts as quickly as possible
Running a business with a friend can lead, often or most times, to certain resentments. But the emotionally wiser partner must try and fix it as quickly as possible before it escalates beyond measure.
Accepting responsibility over something that you are obviously in the right may seem annoying sometimes. However, you need to take this step for the greater good and for the future of your business.
The final decision of starting a business together lies between you and your buddy. Partnering with a friend may have numerous advantages and disadvantages too. But if you believe you are a strong combination, and can make a difference where others failed, you should consider taking the walk together. If not, you’re better off improving your relationship through other means than risking it all by floating a venture together.