Many of us can recall a conversation or two with a friend in which the spark of a creative idea promptly turned into a fledgling business plan.
For me, there was a t-shirt business, a gelato store I bought all the equipment for only to sell it all, and a smattering of other projects I planned to bring to life with friends. Not all of them happened.
As an entrepreneur, I search for advice on how to start and run a successful business all the time. The one rule I see across the board? Do NOT mix business with pleasure. That means starting a business with friends is off the table, right?
Well, I guess these couples we featured recently never got the memo.
Of course, it's only natural that some business ideas are born from the chemistry shared between friends and lovers. However, you should know that going into business with friends, is, well, tricky business. The reality is that starting a business on your own is stressful and chaotic, let alone trying to do it while managing the expectations of someone you appreciate and care for. There are so many things that can go wrong, but also so many that can go astonishingly right. If you decide to start a business with a friend, you should keep the following guidelines front of mind.
Be aware of what's about to change.
Once you decide to pump some gas into this business endeavor, you instantly become "friends that run a business together." Yikes. I'll let that settle in for a minute.
Once you dive in, everything changes, starting with your communication. Delicate lines can easily be crossed when, for instance, you need to give your partner feedback, or when someone drops the ball on a project that impacts you both financially. From the early stages of your business, you should aim to be as transparent and sensitive as possible in anything you communicate to your business partner. Excuse me—friend.
Imagine stepping out of the friend zone with your high school crush and starting a relationship. Sometimes it flourishes into a marvelous partnership, but other times it becomes burdensome, not turning out in the end.
Before you get excited about the idea of going into business with friends, consider the fundamentals of you relationship. Account for your personalities, consider the type of professional behavior they exhibit in their career, and turn a mirror on yourself to identify your own traits and work habits. Are your skill sets complementary? Do you imagine stepping on each others’ toes? Considering these perspectives is crucial to deciding whether your relationship is something worth potentially endangering.
Hey, it's not all bad. But set some ground rules.
The good news is, it can be done. There are even perks to running a company with your friends, like added energy, transparency, and commitment. It's not an impossible mission—everyone from the Quilt founders to BFF's Ben and Jerry have found ways to make it happen without killing each other. Even Supermaker was founded by a wife and husband team.
If I had to guess their key to success, it's probably that they set ground rules with each other from the get-go.
When talk about starting a business starts getting real, have a formal sit down with your potential partner, and lay out your expectations. Be honest about the level of effort you're willing to put into the business, and ask your friend for the same level of raw honesty back.
During this conversation, you want to discuss the details of your roles. Give each other titles and duties within your new company. Who will be in charge of what? How many hours of work should you both chip in? What are your dealbreakers? What happens when one of you is sick? Even solopreneurs have to ask themselves these questions before they get started. Knowing the answers to these questions will save you unbearable headaches down the line, and potentially save your friendship that might result in a messy shutdown of the business.
To make it happen, you have to pick "the one."
Going into business with a friend is not unlike a marriage. Not all friends are suited to become your business partners. Just because you both get along. and get excited about similar things, doesn't mean you'll be great business partners.
Just as you have things to look for in a life partner, you also have to set the highest bar possible when it comes to identifying the right friend to start a business alongside. Make a list of traits you’d like to see in a business partner, and ask yourself if your friend fits the bill.
Look to friends you admire for their skills and work ethics. One of the most prominent rifts between business partners is one feeling they are working harder than the other. What you need is someone who will remain consistent, but flexible throughout difficult times—because there will be many.
Go through your mental Rolodex of friends and swipe left on those who: 1) have a big ego, 2) are too passionate, and 3) don’t walk the walk. When you go into business with someone who has a big ego, small arguments can lead to disaster. And while passion is necessary when building a sustainable business, an overzealous partner will often want to do things their way or the highway. Lastly, we all have those friends that talk a big game, but don’t take much action. Ideas are great, but when you're trying to get your business up and running, what you'll be needing are actions.
When it comes to picking "the one," it's critical that you branch out of your skills. If you both excel at the same things, you won't challenge each other in a way that makes you both, and your business, grow. So if you’re a pretty good designer, search for the one who aced that coding class back in college.
Get it all in writing.
Listen, we all go into partnerships in good faith. But, when pleasure—and more specifically, money—is involved, the aftermath of a failed partnership can be mortifying.
Draft an operating agreement (ideally with the help of a lawyer) that outlines the structure of your mutual partnership. Additionally, create another document that outlines your roles, expectations, core values and goals for the business to ensure that you’re both aligned. Having these in place will help you keep each other accountable.
Here's where it gets really uncomfortable.
You need to contemplate what could go wrong with your business, and in your relationship. Make sure to come up with a backup plan in case something goes awry in the future. Having a healthy exit strategy in place might be the only way to preserve your friendship once all is said and done. Be aware that people, just like businesses, evolve, and even if you're running a successful company together, your partner might evemtia;;y want to pursue other opportunities. You must have a solid plan to let them go. Or a way out for yourself, if you’re the one exploring.
In the end, the secret to starting a successful business with friends is in being honest and being a good listener. Real, no BS conversations about everything from spreadsheets to dinner dates, are sure to be the most important factor in keeping everything running almost smoothly.