So you and your friend had a brainstorming session one night and came up with a great idea for a business. After some investigating into the industry, you’ve found the idea has legs. But before you give notice at your current gig, slow down. You need to figure out if you and your friend are capable of running a business together. Unlike starting a business with your spouse, you and your friend don't spend 24-7 together. And you don't have a legal obligation to continue your relationship if the business doesn’t work out. So before you go starting a business with a friend and expose the friendship to the hard work of being business partners, consider these things first...
Find Out If Your Work Ethic Is Compatible
This might sound a bit harsh, but you should check each other’s work references. Your friend might be a great person that you can count on, but a not-so-great employee. Does your friend change jobs frequently? Complain about coworkers? Grow bored with projects once they lose their newness? Sure, running a business is different from being an employee and can often bring out the best in people. But that doesn’t mean you won’t bring your current work attitudes and habits to the new business. Starting a company requires an incredible commitment with long hours and lots of time together. Make sure you can actually work together first.
Assign Specific Responsibilities
You know what you don’t want to hear from your business partner? “I thought you were taking care of that!” You absolutely must determine, in advance, what each of you will be doing. Give yourself job titles. Then write a job description that carefully lays out individual responsibilities. Be sure to consider not just preferences in your job descriptions—there are things that simply have to get done in order for the business to be successful... like accounting! You need to assign each other every little detail and refer to it often. This will help eliminate tension in the company leadership.
Establish Work Rules
Before launching a business together, you need to consider each other’s preferred work styles. Sit down and have a lengthy discussion about your preferences. Are you a morning person, but your friend likes to sleep in? Are you a deadline cruncher while she works at a steady pace? While your friend might currently work a traditional 9-to-5 job, he might prefer starting the day at 10:30 in the morning. Talk out your work styles in advance. If you hash this out in advance, it will help align expectations and allows you both to accept—and benefit off of—each other’s work practices.
Develop A Conflict Resolution Strategy
While grown adult friends tend not to get into too many tiffs with each other, working together can bring out surprises. That's why you need to create a system for handling conflict. Talk to each other about your experiences with workplace conflict, and what worked to solve it. It might be a good idea to try to get an understanding of your reactions to anger, too. Do you clam up and offer the silent treatment? That could be frustrating to a partner that prefers long talks to hash things out. If you outline in advance your conflict resolution strategy, you might be able to keep your friendship whole while the business grows.
Discuss Personal Finances
No one likes talking about money. But when you’re starting a business together, you must. You need to discuss how much each of you is willing to invest, first and foremost. You might also need to run mutual credit reports. This will be helpful when it comes to getting business loans in the future. Then you both need to face the stark reality: you should both be prepared to forego any sort of personal income from the business for at least six months. At the same time though, you need to have a clear plan for who's going to get paid what once the business reaches a level that affords payroll. Awkward, right? After all, you never knew what your friend made from her old job. Now it's going to be out in the open? Yep. This is where frankness, transparency and trust are critical.
And don’t forget—keep business and personal finances separate!
Before starting a business with a friend, take the time to sit down and work through the five items above. If you do, you'll have a stronger shot at success. Take the time to determine that your goals and expectations are compatible. You'll both thank yourselves later.