You love to hang out all the time, you “get” each other like nobody else could, your skills are perfectly matched, your spheres of influence dovetail neatly – and you’ve got a great idea! The idea of working with a friend might seem like an exciting, wacky adventure, but once the honeymoon period is over, the reality of launching a business together could prove terminal for your venture – and your friendship.
If you and your buddy have a big dream and big plans to make it come true, it’s time to sit down, take off your friendship hat and start thinking about the potential business partnership in cold, hard clinical terms. Starting a business can be a murky, muddy area to consider, with decisions like whether to get a business-loan from Everline to keep you afloat or just to pray that the financial storm soon blows over. To help clear the water a little, here are a few essential rules to follow when you’re looking into launching a business with your best bud….
1 – Trust no-one
No matter how well you know someone or how deeply you trust them, do your research and perform due diligence. It might sound a little invasive but a free company check will reveal any red flags or warning signs which your pal might not have disclosed to you. They may have owned a string of businesses which went into insolvency. They may have CCJs (County Court Judgements) to their name for things like non-payment. A quick company check will reveal anything you may need to worry about.
Some of these issues may not bother you, but if you’re going to be putting a personal, financial stake in your mooted business it’s important to have all the information available to make a reasoned decision.
2 – Lose the rose tinted spectacles
Your friend may be the most creative, talented, awesome and confidence-inspiring person in the whole wide world, but how qualified are they? It’s easy to think your friend is capable of almost anything, so think carefully about what you are hoping to achieve, then work hard to identify how and why they are qualified for the task. Be brutal when you assess what they can and cannot bring to the table. Be open about this process and give your friend the opportunity to explain how and why they are qualified. Encourage them to question you in return.
3 – Put it in writing
No matter how deep your trust runs, make sure your partnership is drawn up and set down by a legal professional. There’s no telling what may happen in the future and you will want to be legally covered in case of every eventuality. This may be an awkward thing to discuss and arrange, but once done, it will provide a secure base for you both to move forward with your business together in confidence.
4 – Make sure you share goals
This is one of the biggest partnership (and friendship) killers. Before you set out in business together, be very certain that your goals are shared. Perhaps your friend has pictured handing your business down to your children, while you’re keen to find a buyer as soon as you can get a tempting offer on the table – then move on to the next enterprise. Take time to talk over your visions, hopes and dreams for your business to make sure they’re compatible.
5 – Draw lots of clear lines
There are lots of lines you will need to draw if you decide to go into partnership with your companion. Firstly, you’ll need to draw lines between the personal and the professional. This will help to keep your professional life productive and unclouded by emotions – and it will help to keep your personal life a space for relaxation and friendship.
Secondly, you’ll need to draw lines which clearly define your individual roles. There’s nothing more destructive in a partnership that stepping on toes, so make sure you both understand exactly what each others’ responsibilities are before you dive in.
6 – Give constructive feedback
It can be hard to critique a friend in a professional context. While it’s easy enough to tell her that her new hat makes her look like a retro butcher (and not in a good way), it’s not easy to tell her that her sales technique is a little aggressive. Set up a monthly date to talk about what you’re both doing well and areas in which improvements could be made. Make sure it’s a friendly “judgement-free” zone!
7 – Have a “disaster plan”
Perhaps your friend wants to leave the partnership, perhaps you go bust, anything can happen and when it does, you need to be prepared. Good, legal structures will help smooth out disasters, but it’s also worthwhile discussing how you will handle yourselves personally in case of emergency. A foundation of trust and respect is key.
Do you work in partnership with a close friend? How has your business changed your friendship? Would you recommend having a “friend with (business) benefits”? Share your experiences and views with our readers below.
Jane Knowles is a business advisor and writer, sharing her insights into everything – from successful business relationships to boosting workplace productivity – online and in print.