If you’re an entrepreneur or potential entrepreneur, a few of your friends are likely to be as well. You discuss or share business ideas from time to time. Maybe you’ve discovered a profitable business opportunity and are considering joining a partnership.
It’s a good start that you’ve talked about your company ideas. People that get along enjoy the idea of starting a business with a friend. Is it, however, a bad idea to start a business with your friends? Continue reading to see if starting a business with a friend is a realistic choice for you.
Benefits of doing business with friends include:
A business venture among friends has various advantages that make it worthwhile to try.
You have a long-term relationship with a partner:
Depending on your closeness, you’ll have fewer surprises about your partner as a result of this. Beyond the surface, you already have a sense of their personality. You’ve probably seen their awful and ugly as well as their good.
Together, handling the difficult corporate environment will be easier. You’re well-versed about your partner’s financial assets (and vice versa). You two can form a dream team that works well together.
You already know how to communicate:
Clarity and directness are two qualities that make a business partnership develop. In order for that to happen, the partners must be able to easily communicate in-depth about any topic.
This may not be the case with a partner you’ve known for a few months. Years of knowing your friend, on the other hand, promote smooth conversation. You’ve probably seen their awful and ugly as well as their good.
You’ll get to the root of the problem quickly and face the challenges that are affecting your company.
You’ll be able to spend more time together:
You made friends for a number of reasons. Your friendship is what inspired the idea for you to create a business together.
You’ll have plenty of opportunities to spend quality time together, something you already enjoy. Your friendship will no longer be restricted to mutual hobbies, interests, or activities. You’ll spend that time with someone you get along with, whether it’s for weekly meetings, updates, or any other area of the business.
Your values and views are similar:
“Birds of a feather flock together,” as the phrase goes.
Your friendship may have formed as a result of shared basic values and beliefs. Being a business partner includes having the same passion for the same goal and mission.
Whatever problems your company faces, you will most likely support each other’s business decisions. When things are bad, you’ll be there for each other. You’ll be available to help one another in ways that family or spouses might not be able to.
The disadvantages of doing business with friends include:
There’s always the flip side of the coin, and it might be useful for companies. The following are some of the risks of forming a business partnership with a friend.
What was once a good friendship can fade away:
As painful as it may sound, what was once a good friendship might fade away. Managing a company needs hard work, and depending on how you receive and give feedback and constructive criticism, good friends can become “simply” business partners.
One partner may believe the other is pushy or careless. As a result, their activities may put their relationship under stress. People who hang together all the time start to become away from each other before they realize it.
Your business may be too casual:
Your relationship may make it difficult for you to distinguish between business and friendship. It will be your business that suffers if you do not set the barrier. Due to a lack of clearly defined duties, some areas of the company may be neglected while others are overworked.
Because you’re both partners in crime, indiscipline may go unnoticed. You could avoid making difficult decisions by simply communicating.
If not resolved, such problems will lead to a lack of attention on the functioning of the business. The venture’s collapse is unavoidable in the long run.
You have a small social circle:
Perhaps your partner has known you for years or grew up in the area. There’s a chance you have mutual friends and share similar interests. When you participate in a commercial business, your network circle can limit your growth.
If the partners aren’t mates, each of them may bring a unique set of experiences and networks to the table.
There’s a chance you’ll lose your friend:
You’ve probably done and gone through a lot of things together, but not in the context of investing. Maybe your friend isn’t made out to operate a business.
Such an event is a loss for your friendship and may result in a split. It’s going to be difficult between you two. You’ll lose your friend, as well as possibly some of your mutual pals.
Before beginning a business with a friend, ask yourself the following questions:
Being excellent friends is not the same as having to work for hours on end to build a successful business. Before you start a business with a friend, consider the following points.
Do you have faith in your pal?
Money has a strange way of inspiring people with all kinds of ideas. Many people have lost money to someone they thought was their friend. The point is, what is your friend’s track record when it comes to money? Is there going to be absolute clarity?
Some partners may take advantage of the situation.
Still, they could be involved in unethical dealings. Is there a chance you’ll get into trouble? What is your level of intimacy with your friend?
Do you have an identical goal in mind?
In other areas of life, you may have alternative views and personal preferences, but your loyalty to your relationship is motivated by your goal. When you’re both headed in the same direction, doing business together will come effortlessly.
Do you have the same vision and goals?
It’s critical that everyone is on the same page from the start. You and your partner should have the same vision, whether it’s for long-term or short-term goals. Having a shared game plan will help you avoid future conflicts.
Do you have any skills that suit each other?
You must consider both of your skill sets.
What is the added benefit of your joining together? You’ll face a lot of difficulties if you’re good and bad at the same aspects of running a successful business. Do your qualities complement and balance each other?
In the end, your partner should have certain qualities that you don’t. Consider what the company demands in a realistic and strategic manner.
Would you be able to start this business on your own?
Friendships might become caught in the idea of doing something together, although this isn’t always the greatest option. If you can get the business up and go on your own, you generally don’t need a partner. You can employ others while being the only owner.
If you don’t have enough money, a partnership is a smart option. Along with helping you if you lack specific skills or contacts. A partnership will provide value to your startup.
Are you able to conduct a pilot test?
You’re about to put your money and time into something. In some cases, it’s a good idea to test the waters first before jumping in. This experience allows you to observe yourself and your partner in a professional atmosphere.
Before investing your money and time, a trial run might answer various questions. That way, you’ll be able to spot places that require more attention and creative solutions to the problems you’ve identified.
Are you both prepared to put in the same amount of effort and money?
In order to get the business off the ground, time and money will be important.
Are you going to split the bill 50/50? If that’s the case, how would it benefit you both? What are the emergency plans in case anything unusual occurs?
You’ll need to understand each partner’s stake and how it will affect the company’s future. Consider what will happen if the company succeeds or fails.