Starting a business with a friend might sound like a smart and inspiring idea. After all, who knows you better than your bestie, and wouldn’t it be comforting to have a familiar face alongside you when you dive into the deep end of entrepreneurship?
But while both these questions might garner immediate positive responses, setting up shop with a pal is not as clear-cut as it might seem.
Building a successful business is known to be one of the most difficult things any individual can take on. Add in a person you love or like who may turn out to have different expectations or a weird way of working you didn’t realise, and all of a sudden tempers are rising, tension is constant and the friendship you thought was rock solid is the exact thing you’re blaming for all the business’s blunders.
That’s not to say you should never consider starting a business with a friend. But if it is something you’re currently thinking about, then you and your possible business partner need to consider these questions carefully and honestly first.
Do you share the same business vision and goals?
You and your friend might both love the idea of being co-business owners. And you might be completely committed to your business idea. But if your separate goals and vision for this new venture don’t match up, then your business is likely to be one of the 20% that fail in their first year.
Understanding each other’s goals and vision means working out together where you want to see the business going in three years, five years and even 10 years. You may find out that your pal is not planning on helming the business for 10 years and, instead, is hoping to make some fast money and retire early!
Or your dream of a business built on sustainably-made products might completely clash with their idea that the materials don’t matter as long as the products can be priced competitively.
What to Do: Identify short-term and long-term goals that you’re both prepared to work towards. Lay it all out in a strategic map for the next 1 to 5 or even 1 to 10 years of your business’s life.
It’s probably wise to include an exit strategy as part of this too so that if, after five years, the business is not progressing, you can both refer to the plan to see if it’s time to call it quits in a way that doesn’t cause chaos or rifts between co-founders.
When going through your goals, ensure that they also reflect a vision for – and a commitment to – the business that you both buy into.
Do your skills complement one another?
You and your friend each have your area of expertise. But you’ll need to evaluate what this expertise entails to ensure you’re both bringing something extra to the table.
If your skill sets are the same rather than complimentary, it’ll create an imbalance in the company that could cause the downfall of your dream. For example, if both of you are great at designing products but neither feels confident doing sales or crunching numbers then there are going to be some critical gaps in your business progress.
Resentments might start to simmer if neither of you can pull up the slack or you’re pushed into a role you’re not able for. Resentments can also arise if one of you has significantly more experience than the other and ends up taking on most of the top tasks.
What to Do: Honestly discuss the different skills you can both bring to the business. Then use these skill sets to help you define the roles and daily duties each of you will take on. Once those respective roles are determined, trust each other to go ahead and do the jobs assigned but carve out agreed times and space for updates and check-ins.
If there are obvious skill gaps, you might consider bringing others in to fill them. But if you do, make sure that you and your co-founding friend are both onboard about the job descriptions of these new positions and whether you really have the budget to pay others when you’re starting out.
Can you communicate openly and honestly with each other?
This is one of the most important elements of starting a business with someone else. You may think that because you can tell your friend that, yes, her bum does, in fact, look big in those jeans, you can tell her anything, but that’s not necessarily the case.
The truth is, you may find it difficult to bring up issues, particularly around work ethics or problems arising from their end of the business. However, unaddressed issues can lead to conflict as can the actual fear or reluctance to bring up the problems in conversation.
Additionally, an inability to discuss what’s going on in a business can lead to a lack of transparency, which brings a whole bucketload of ills with it too. These can include a lack of trust, false information or bad feelings in the workplace.
What to Do: It’s crucial to work out how communication will happen both between co-founders and co-founders and the rest of the company (if you have additional staff or have outsourced some business tasks).
Thanks to technology, there are several ways to keep on top of what’s going on day-to-day and to ensure total transparency in everything relating to the business. So, go through the apps and tools you’ll use to track, manage and communicate at work.
When it comes to founders communicating with each other, it’s a smart idea to write out some guidelines. These can be around how often you’ll meet to discuss business matters, how to ensure a solutions-oriented approach to problems and how to resolve conflicts if and when they arise.
Creating such guidelines is not just a sure step to better communication but also underlines the fact that you’ll inevitably face problems in a newly launched business. For many co-founders, this is a relief to acknowledge and accept. And particularly as it proves you and your friend are prepared to tackle the problems together when they arise.