10 Questions to Ask Yourself Before Starting a Business With a Friend
Mixing friends with business is risky. Yes! Please admit it; you are terrified to go into business with your bestie! Not because you don’t love or trust them but you know if the business fails so can the friendship. I’m just going to get this out the way. A great friend is NOT equivalent to a great business partner.
Yes, a great friend and a great business partner share many of the same qualities: honest, trusting, reliable, great communicator, passion and loyal. But there are more than character traits and common interest that make a business successful.
Realizing you’re not obligated to start a business with your friend (just because they’re your friend) will save you a lot of time and energy. However, I’m confident if you take the time to ask yourself some much-needed question and have the courage the answer them with full honesty and transparency, you will be fine.
What is my vision for the business?
What does this business look like to you? How will it grow in the next 90 days, year or even in 5 years? More importantly, you need to have a clear understanding of the vision you have for the business, your values and your non-negotiables.
What are my strengths and weaknesses?
First of all, you need to know what you bring to the table. Once you are clear on your vision, it’s time to evaluate your skill set. Being able to answer these questions will make it easier for you to enter a partnership with confidence.
What characteristics and skills do I need in a business partner?
Like any relationship, business partnerships rely heavily on consistent communication. Look for a business partner who’s easy to talk to, gives a new perspective on problem-solving, with skills and resources that benefit you and the business.
What are the pros and cons of starting a business with my friend?
Now that you know what you bring the table, it’s time to make another list. Is my friend highly organized or all over the place? Is she a woman that keeps her word? How does he handle conflict? What’s her communication style? Is he good at managing money? What are her personal goals? Do they align with the business?
Is my potential partner’s commitment to the business as strong as mine?
A partnership with your friend can seem fun and exciting at first, but things can change. Once the honeymoon phase is over, will the partnership still be worth it? Will it make sense? If they’re not a committed as you, it can be damaging to the business.
If the business doesn’t work out, how easy would it be for us to remain friends?
Most businesses fail. That’s a fact and not up for debate. Do you think your friendship can survive a failing business?
Would I be willing to start this business if I had to do it alone?
No really, would you? If you had to do this business alone, would you still be as passionate, committed and excited to invest? Partnerships are tricky. Think about it: do you really need a partner? Or is it more of a safety net and want to have one?
Are they willing to put everything in writing?
Many partnerships start with an overly passionate conversation ending with “yea, I’m down,” and this is a recipe for disaster. The consequences don’t stop with each individual but overflow into the business if agreements aren’t put into place in the beginning. Putting your business plan and partnership in writing will make it concrete. Once it’s in writing, the partnership will have professional standards to uphold.
If your friend doesn’t want to but a partnership agreement in writing RUN. That’s right, not wanting to be professional from the beginning is a red flag.
A partnership agreement is different from a business plan. It sets the terms and conditions for how the partnership will operate. A basic partnership agreement should outline the name, purpose, each partner’s role, financial contributions and also cover the following:
- Debt (What happens if one of the partners becomes financially unstable? Files for bankruptcy?)
- Disability (What happens if physical work is unable to be done by one of the partners? What will happen if they can no longer contribute the time and talent needed to run the business?)
- Disagreement (How will conflict be resolved? Will a mediator be used?)
- Death (Take into consideration what will happen in the event one of the partners suddenly passes away.)
Am I comfortable with my friend knowing my financial status and possibly having access to my personal information?
Just because you’re dealing with your friend doesn’t mean you want them all up in your business. There are levels to friendship. Are you comfortable enough with this person to allow them access to your business and personal world? Your business partner needs to be someone you can trust with sensitive information.
Is there a better business partner for me other than my friend?
I know you don’t want to shade your friend and trust me, asking yourself this question isn’t doing that but you have to be honest with yourself. All factors included: proximity to each other, financial stability, industry knowledge, passion, work ethic…you name it!
This question requires brutal honesty and time for reflection. If you’re serious about entrepreneurial success then you know important it is to research and then weigh your options. In the end, if you find that after thinking it through that your friend is indeed the right choice for you, congratulations. If not, that’s ok too.
Being able to answer these ten questions honestly will save you a lot of time and money. Let’s be clear, if you’re not willing to put in the time to be transparent with strengths, weaknesses, financial status, time willing to commit and. Then chances are you’re not ready to start a business, even with a partner. That’s right. If you find yourself not willing to do the work with yourself then you shouldn’t be working with someone else.
What advice do you have on starting a business with a friend? Leave a reply below.