Are You Planning on Starting a Business With Your Friend?

Chances are that some of your friends are entrepreneurs or aspiring entrepreneurs. You may share your business ideas or brainstorm with others from time to time. You might have found a great business opportunity and want to start a business together.

It’s a good place to start, because you have already discussed your ideas. People who are good friends will be excited to start a business together. But is it bad to have friends start your business? Continue reading to find out if starting a business with a friend is possible.

There Are Many Benefits to Doing Business With Friends

A Partner You Really Know Is Your Best Friend

You’ll probably have less surprises depending on how close your friend is to you. Their personality is already well-known. You’re likely to have seen their bad and good moments as well as their brighter side.

Navigating the big business world together will be easier. Your partner is fully aware of both your strengths and weaknesses, and vice versa. The two of you can create a dynamic team that complements one another.

You Already Know How You Can Communicate

Clarity and decisiveness are two of the key factors that enable a partnership to thrive. To achieve this, partners must communicate clearly and in depth about any matter.

This might not hold true for someone you have only known for a few months. But years of friendship can make it easier to communicate. You will quickly get to the root of the problem and resolve any problems that may be facing your company.

You Are Able to Spend More Time Together

There were many reasons you guys became close friends. It was your friendship that led to the potential idea of you starting a business together. You enjoy getting to know each other and keeping in touch.

You will have the opportunity to spend more time together than you normally do. You will find that your friendship is not limited to common interests, hobbies, or activities. You will spend your time with someone you like, whether it be the weekly meetings, updates or any other aspect of the business.

Similar Values and Beliefs Exist Among You

According to the old saying, “birds of one feather flock together“. Your friendship may have been based on similar core values and beliefs. Business partners are people who both share the same vision and mission .

You will support each other in business, no matter what challenges you may face. You will be there for each other when things get difficult. You will help each other in ways that spouses or families may not be able.

Pro’s of Doing Business With Friends

Sometimes it can be a good thing for a company, but there is always the downside. These are the cons of forming a partnership along with a friend.

Relationships Can Be Made Strictly Business

It is possible for a once good friend to fade, however sad it may sound. It is hard work to run a business. Good friends can become “just” business partners if you are able to give and receive feedback. Sometimes one partner may feel that the other is too bossy, or negligent. Their actions can cause tension in the relationship. People who spend a lot of time together start to become more distant before they realise it.

Your Business Might Be Too Casual

You might be blinded by your relationship and not know the difference between friendship and business. Your business will suffer if you don’t draw the line. It’s possible for some business areas to be neglected and others to be overdone if there aren’t clear roles.

Because you are both partners in crime, your indiscretion might be unchecked. It is possible to avoid making difficult decisions and simply chat with your friends. These things can lead to an inability to focus on the business if they are not addressed. The potential failure of the venture will eventually be inevitable.

You Only Have a Small Network

Maybe your partner is a friend of many years, or you grew up there. You may have common friends or similar interests. Your growth is limited by your network circle if you work together in a business venture.

If partners are not friends, they might each bring their own experiences and networks.

Your Friend Might Be Gone

Although you might have been through some things together, it is not something that would work in an investment environment. Perhaps your friend isn‘t equipped to manage a business. Worst-case scenario: Your friend makes a poor decision and your enterprise falls apart.

This could cause a rift between you two. You will have to deal with some awkward situations. You may lose your friend, as well as some mutual friends.

Before Starting a Business With Someone You Know, Ask These Questions;

It’s a different thing to be good friends than working hard and creating a successful business. These are some things you should consider before starting your own business with a friend.

Are You Able to Trust Your Friend?

Money can give people all kinds of ideas. Many people have lost their money to friends. Do you know your friend’s financial reputation? Is there total transparency?

Some partners may take money from the cashbox. They might still make shady deals. Are there any chances of them getting in trouble? What do you exactly know about your friend?

Are You on a Similar Mission?

While you might have different opinions and preferences in some areas of your life, your mission is what drives your partnership. If you both are on the same straight path, doing business together will be easy.

Are You Pursuing the Same Vision and Goals?

It is essential that you and your partner agree from the beginning. Your partner and you should share the same vision, regardless of whether it’s long-term or short term goals . A mutual game plan can reduce future conflicts.

Are You Able to Use Your Complementary Skills?

Evaluate the skillset you both bring to the table. How valuable is your collaboration? You’ll face many difficulties if you are both good at different aspects of running a successful business. Are your strengths complementary or antagonistic?

Your partner should have some of the same qualities as you. You must be realistic in determining the requirements of your business.

What if You Could Start the Same Business Yourself?

Friends sometimes get caught up in the idea that they can do something together. However, it is not always the best option. If you are able to set up the business yourself, you don’t necessarily need a partner. You can also hire others to help you, but you will still be the sole owner.

A partnership can be a good option if you don’t have enough capital. If you don‘t have the right skills or connections, a strategic partner can add significant value to your startup.

Can You Do a Pilot Test?

You are about to make a big investment of your time and money. Sometimes it is a good idea for you to try the waters before making a decision. This gives you the chance to meet your partner and see how they work together in a business setting.

Before you commit your capital or energy, the trial run can help answer many questions. This will help you identify areas that require more attention than others and how to overcome them.

Do You and Your Partner Want to Put the Same Amount of Money and Time Into It?

The venture will need capital and time to get it up and running. Do you intend to have 50-50 partners? What will happen if you are not 50-50 partners? What are your exit options in the event of a situation like this?

It is important to know what each partner shares and how it will impact the future of your business. Consider what happens if the business is successful or fails.

How to Start Your Own Business With a Friend

You can share the entrepreneurial journey with a friend by starting a business together. It would be a good idea to have a few things in order before you embark on your quest.

1. Establish Your Roles

Before you start the business, be clear about each partner’s role. When you are in operation, there will be no conflicts or confusion. Be flexible and open to changes.

2. Set Communication Guidelines

You should make time for communication. Keep all necessary information safe and organised. Transparency is key in all aspects of the business, directly and indirectly.

3. Together, Write Your Plan

It is necessary to create a formal business plan. You can either have legal counsel or put it in writing. This will help you keep track of your plans as you implement them. To ensure that you are both on the same page, go through the initial planning together. You can review your plan and make revisions together or lay out the expectations for each partner.

For more information on how to create a successful business plan, take a look at: 7 Steps to Create a Successful Business Plan

4. Establish Milestones and Common Goals

Define clearly how you will achieve your goals, both logically as well as practically. Identify what must be done first and when. Then, determine the next steps. This will help you both to set the same goals and establish milestones that track your progress.

Should You Partner With a Friend to Start Your Business?

Do not start a business together just because you had fun. You must follow your heart and bring your mind with you when you turn a potential business idea into a profit. If done right, it can be incredibly rewarding to start a business with a friend.

Take a look at our most recent blog: Positive and Negative Budgeting Tips to Look Out for in 2023

ActionCOACH can help you develop and grow your business through a wide variety of services, from business coaching and mentoring to sales training and marketing assistance. No matter what stage your business is in, our team of experienced coaches can help you take it to the next level.

If you’re serious about starting a new business with a close friend, ActionCOACH is the perfect partner to help you get there.

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