Do you have a friend or family member who has always had an entrepreneurial spirit? Do they go out of their way to make things happen, and are they the type of people that can see opportunity in every setback?
If so, it’s time to ask them if they want to start a business with you. It might sound like the ultimate dream job for some people – working with friends on something you love together. But many factors need to be considered before taking this leap into entrepreneurship.
Friends started companies like Airbnb and Ben & Jerry’s, but plenty of cautionary tales are also. So, if you’re thinking about starting a business with your friends, here are seven things you need to know first:
- Thing that you need to Consider.
- Pros and Cons of Doing Business With Friends
- Cons of Doing business with friends
- Tips for Starting a Business With Your Friend
Here are the List 7 thing that you need to Consider
1. It’s important to be honest with each other.
The best businesses are founded on trust and honesty. If you can’t be open and honest with your friends, their strengths and weaknesses, you’ll be setting yourself up for problems from the start. Get real about who will do what, and be honest about money – how much each person is willing to invest, and how you will share profits (or losses).
2. You need to be able to handle conflict.
No one is perfect, and inevitably you will have disagreements with your friends. It would help if you resolved conflicts healthily to don’t impact the business. This might mean taking a step back from the business for a little while or agreeing to disagree on some things.
For Instance, in a previous business venture with friends, we had different visions for the company and could not agree on moving forward. We had to part ways, but I remain friends with those individuals.
3. Money is always going to be an issue.
Money is often a touchy subject among friends, and it will only become more complicated when you’re dealing with it as co-owners of a business. To avoid any hard feelings, be transparent about your finances from the start and make agreements about who pays what and when.
4.You need to be able to work independently.
If you’re used to relying on your friends for everything, you might suddenly find it difficult to start working independently. This is especially true if you’re the creative type and rely on your friends to bounce ideas off. However, you have to learn how to do what needs to be done for the business to thrive when it comes down to it. It will make success a lot sweeter in the end.
5. Don’t sign anything until you’ve seen a lawyer’s advice.
While many partners in a startup may feel comfortable going by handshake agreements and oral contracts alone, that can spell trouble when disputes arise, or one partner wants out. To protect yourself from any problems later on, get everything documented in writing from the start – even if that means paying for a lawyer’s services upfront. Also, don’t let anyone you into signing any legal documents until you’ve read and fully understood what you’re signing.
6. You’ll need to split up duties.
In any business, it’s important to have clear divisions of labor so that everyone knows their role and can be held accountable. This is especially important when starting a business with friends because you’ll want to avoid any confusion or resentment about who is doing more work.
7. You’ll need to be prepared for the long haul.
Starting a business with friends isn’t a quick or easy process – it will likely take much time, energy, and patience before you see any real results. So make sure you’re all in it for the long haul and ready to put in the hard work necessary for success.
Pros and Cons of Doing Business With Friends
Now Let’s see the Pros of Doing business with friends :
Friendships are the foundation of any good business.
Friendships are built around trust, which allows you to be open and honest. This honesty is the foundation of success for any business. When you’re able to be open about your business, you can move forward without any hidden agendas.
Working with friends can be fun.
There’s nothing more enjoyable than working with friends and enjoying good times while doing it. When the work is enjoyable, it doesn’t feel like work. This can make the process a lot smoother and less stressful.
You have someone you trust to help you out when things get tough.
No one is perfect, and we all need help sometimes. When things get tough in business, it’s great to know that you have someone you trust who can help bail you out. This can be a lifesaver when the going gets tough.
There is less risk of the business failing because of personal relationships.
If the business fails, it’s not because of personal relationships. This can help to prevent any hard feelings or resentment between friends.
You already have a built-in support system.
Having a built-in support system can be a lifesaver. If one of the friends in your business needs help, you’ll be there to provide it. This can help to keep any hard feelings or resentment from boiling over.
It can be more fun to work with friends than strangers.
It can be more fun to work with friends than strangers because there is a sense of familiarity. When working with friends, you’re comfortable around one another and feel free to express yourself as you would normally.
You can share both the good and bad times.
You can share both the good and bad times with friends, making it a much more enjoyable experience. When things are going well, you can celebrate together. And when things are tough, you can support each other through the tough times.
Your friends know you well and will likely offer honest feedback and advice.
When your friends know you well, they’ll likely be honest with their feedback and advice. This is the only way to get effective feedback for many entrepreneurs because most people will sugarcoat it. Your employees can relate better to your friends than strangers.
Your employees are more likely to relate better to your friends than strangers for much of the same reasons that you do. When working with friends, there’s a sense of trust between everyone, making the working relationship easier overall. Friends are also less likely to hold back criticism when necessary, which can be helpful when trying to grow the business.
You’re more likely to succeed if everyone is on board and committed to the same goal.
If everyone is on board and committed to the same goal, you’re more likely to succeed. When friends work together, they’re usually all in it for the same reasons. This can make the process a lot smoother and less stressful.
It’s easier to make decisions when everyone agrees.
When friends work together, it’s a lot easier to make decisions. Everyone is on the same page and agrees with each other, so there isn’t much debating.
Working with friends can boost morale and encourage team spirit.
Working with friends can boost morale and encourage team spirit. This can be a lifesaver when things get tough, or the going gets rough. Friends are also more likely to support you and cheer for your success, which can be a huge source of motivation.
There’s nothing more enjoyable than working with friends who share the same passion you do. If you’re able to work with friends on your business, there’s no limit to what you could accomplish together! Good luck!
Read More: 9 Ways to Review Your Finances Without Overdoing It
Now let’s check the cons of Doing business with friends.
Friends are likely to gossip about your business.
Friends may gossip about your business, whether it’s intentional or not. This can be harmful because you never know who is listening in. For this reason, many entrepreneurs choose to keep their personal and professional lives separate from each other to prevent any issues with confidentiality. You could lose a friend if the friendship becomes strained due to disagreements with work.
Friends can be difficult to manage if they’re not on the same page as you.
When you have friends working with you, there’s always the chance your friends could become strained due to disagreements or arguments at work. The best way to avoid this is to keep personal feelings out of business decisions and stick to professional advice when necessary. Your employees may not like having friends as their managers.
Your employees are likely to be more concerned about pleasing their friends than doing what’s in the company’s best interest. This can present all sorts of issues if they aren’t on the same page regarding the direction of the business. Plus, it can make for an uncomfortable working environment if everyone feels like they’re constantly being watched by someone who knows them personally. Friends will likely expect special treatment at work presents a conflict of interest for you.
Friends may expect special treatment at work, which can present a conflict of interest for you. You never know who will get preferential treatment, so it’s best to avoid the problem altogether by not allowing friends to work with you if possible. If you decide to allow your friends to work with you, be sure that you’re upfront about any conflicts of interest and always put business first.
Friends who don’t share the same values or goals may suffer from personal relationships.
If your friends don’t share the same values or goals, it cannot be easy to work when there’s a difference in morals and beliefs. Personal relationships can become strained without common ground, which can lead to problems both personally and professionally.
Working with friends is great if everyone involved has the same overall goal in mind. However, there’s no denying that having friends work with you comes with its fair share of potential issues, which must be dealt with carefully. If you’re looking for some advice about whether or not working with friends could help your business, get in touch today!
The world of entrepreneurship involves many challenges, but it also gives us chances to do things we otherwise couldn’t have done alone. It allows us to grow as individuals while also helping others grow. There are several pros and cons to consider when making decisions when it comes to business. There are also several factors to keep in mind before working with friends. Friends can be a great help when it comes to business, but only if the friendship is strong enough to withstand any potential challenges that may come up.
You have less control over how your employees feel about your company.
Setting clear boundaries when working with friends will help prevent any problems in the future if you’re trying to find out more about how to work with friends in your business.
Friends may not be as willing to give honest feedback or advice because they don’t want to hurt your feelings.
A friend may not give honest feedback because they don’t want to hurt your feelings. When you have friends working with you, it can be difficult to receive tough love when needed. If you see a red flag that needs attention, it’s probably best to seek advice from someone outside the friendship who won’t worry about hurting your feelings.
Friends might feel as though other employees are watching them, which can lead to uncomfortable interactions.
You never know how others will respond or feel about a friendship at work, so it’s important to keep things professional in all circumstances. Your friends may begin feeling as though they need permission before doing anything, making for an awkward working environment where everyone feels uncomfortable around each other.
Fire friends can be more difficult if they’re not performing up to standards.
If you have friends working with you, it can be more difficult to fire them if they’re not performing up to standards. This is especially true if personal feelings are involved because it can often feel emotionally charged or impersonal. Use your best judgment when considering whether or not your friend should be let go and try putting business first as much as possible.
Friends may feel entitled to special treatment, which could create tension in the workplace.
People may feel as though they’re entitled to special treatment if they know you and your friends on a personal level. This can create tension in the workplace and make it difficult for others to feel like they’re on an equal playing field. If you’re worried about this, be sure to set clear boundaries with your friends and make it known that everyone is expected to follow the same rules.
Tips for Starting a Business With Your Friend
Here are the important tips you need to consider when starting a business with your friend.
Nit-Pick Your Business Plan.
There is almost no such thing as too much planning in a business venture. When you come up with an idea, create a thorough plan for its implementation. By determining what it takes to get your business off the ground and maintaining it in the long term, you will be able to prevent potential pitfalls that may arise later on. You can discuss each step of your plan thoroughly with your partner before making any concrete decisions.
Talk about everything from how your day-to-day operations will work to how large you want your company to grow over time. Even if some things discussed do not end up being relevant or true down the road, this discussion early on will help you form stronger bonds between yourself and your partner.
Be Ready to Take on More Responsibility.
When starting a business with someone else, it is important to be aware that you will likely be taking on more responsibility than working on your own. This is simply because there are now two (or more) people who need to agree and be on the same page about major decisions related to the company. As such, you must be comfortable with handling a larger workload and can communicate openly when things get tough.
Create Clear Roles and Responsibilities.
To avoid any confusion or conflict down the road, it is important to create very clear and responsibilities for each partner from the beginning. This means detailing everything from who is responsible for what marketing tasks to who will be ordering inventory. By having a solid understanding of each other’s strengths and weaknesses, you will be able to delegate tasks in a way that makes the most sense for your business.
Make it Official With Contracts.
While it may seem a bit excessive, signing legal contracts can help to ensure that both you and your partner are protected if things go south. This is especially important if you contribute money or other assets to the business. Having documents in place that spell out each party’s rights and responsibilities can help to avoid any potential confusion or conflict down the road.
Creating a company with a friend can be an incredibly rewarding experience, but it is important to go into it with your eyes wide open. By planning things out carefully and laying down some ground rules early on, you can help ensure that your partnership is a success.
- Shivani is a personal finance expert who covers topics from credit cards to travel rewards. She's featured in Prestige Magazine and passionate about helping readers make responsible financial decisions. Based in New Delhi, she travels as a digital nomad, sharing her knowledge worldwide.