Starting a business with a friend makes sense because turning to the people we’ve chosen to have in our lives because we like them and we share similar interests is very natural when taking the first steps into entrepreneurship.
It sounds fun to get into business with a friend, which is why so many people do it (in fact, an estimated 40 percent of new businesses have friends as founders). But then, you hear about the horror stories—the partnerships that dissolved, causing a rift that killed the friendship and the business permanently.
Be cautious when you’re thinking about starting up a business with your pal. As with most things in life, becoming business partners with friends can be either successful or unsuccessful depending on the people and circumstances involved.
To help you decide if you and your friend can “make it” as business partners, take a look at these pros and cons of founding with friends.
Trust and honesty
Because you already know and trust your friend, you can trust them to be supportive and open, and vice versa. It’s sometimes easier to be honest about problems because the trust already exists. You already know each other so well that it’s easier to decide who will take on which responsibilities and how you can each leverage your strengths.
A shared vision
When you start a new business, being on the same page with your co-founders about the vision for the business is crucial. By starting out as friends, you’ve probably been dreaming about this vision together—and know where you want to take it.
Passion isn’t something you can fake, and it’s hard to invest someone else in your vision unless they believe in you. That’s already taken care of when you found with a friend.
Someone to lean on
Entrepreneurship is no walk in the park, especially at the beginning. Many people give up and go back to the corporate world without a support system encouraging them to continue.
Founding with friends means you’ll always have someone to lean on during the tough times. There are going to be good days and bad days, and being able to support each other—and celebrate together—can mean the difference between persevering and giving up.
More fun at work
Having your best friend around all the time is great. You can joke around together, have a relaxed atmosphere in the office, and just generally have more fun at work. Normally, going into work can be a bit of a drag, but since your personality and your co-founders already mesh, it can make the workday go by a lot more quickly than normal.
Blind spots and unacknowledged weaknesses
We all know that our friends are not perfect—and yet it can sometimes be difficult to see the flaws that others do or call them out for behavior that might not serve the business. No one wants to ruin their personal relationships with friends—but tiptoeing around problems can lead to a sinking ship.
Additionally, many founding teams that were friends first can’t see the weaknesses in one another, simply because they share those weaknesses. Getting outside perspectives is essential in the process of building a business.
Of course, no one thinks that they’ll be fighting for control when they go into a business with their friends—but it happens all the time. Entrepreneurs always wear many hats, but when you’re getting into business with friends, knowing which roles each of you will handle is crucial. If one person starts taking charge and acting as the manager, the other founders might become frustrated and communication can break down.
There’s a big difference between leadership and management, and that difference can determine whether the founding team is built on inspiration or resentment.
Work and social life blur together
Although working together can be a lot of fun, it’s a double-edged sword. Your socializing might just become more like work, and it’s easy to lose sight of your friendship as a separate entity. Because you and your buddy will be living and breathing the new business, your work and life might just become one entity, and you need to be able to step back and take some time for yourself.
There’s also the problem of knowing more about each other than most colleagues do. That can make it difficult to separate the professional from the personal. Little quirks that might not bother you in a friend could end up being irritating as coworkers.
A potentially awkward ending
Of course, the biggest pitfall of founding with friends is the potential for a messy “breakup.” If you start arguing regularly, disagree on the direction to take the business, or if one partner is picking up the slack for the other, resentment can brew.
Sometimes, these boil over and end up sinking the business—and the friendship. It’s always a risk to found with friends because you have the inherent risks of starting a business combined with the risk of losing a cherished friend in the process.
Proceed with caution
Founding with friends has high stakes, and you should always be cautious if you decide to move forward. Some people describe it as similar to deciding to marry someone. Some early planning can help prevent problems further down the line and help you build a strong company with your friend.
Get crystal clear on which types of funding you’ll seek (bootstrapping, peer-to-peer lending, crowdfunding and small business loans all have their pros and cons), what each of your roles will be, and how you’ll deal with communication problems that will inevitably come up along the way. Then, put it in writing and refer to it often.
There will be bumps in the road, and you’ll need to anticipate them for your business—and your friendship—to stay in one piece.
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