It is clearly proven that business partnerships can be the golden key to success, or its very own self destruction button. It is your responsibility to understand and decide if going into business with a friend, is going to be the best decision you ever made or potentially the most fatal one.
When starting a new business it often seems logical to partner up with a close friend, why would you not? You have known each other for years, your personal relationship is great and both of you want success, its a no brainer... what could possibly go wrong?
However, many people underestimate the stress of a business and the strain it will put on the friendship. I have seen many businesses fold because of a failing friendship within the business and personally experienced the split of a friendship, which in result ended 2 small businesses!
"Friends will always be the easier option, rather than approaching an unknown vendor/partner"
If you are considering partnering with a friend, then please take time to read the following. It could potentially make or break your decision/future business. Please learn from mine and others mistakes.
1. Integrity - This is the key characteristic you should look for when deciding if a friend is a potential partner. It does not matter how close you are, if the person lacks integrity then bringing them onboard is simply too risky.
2. Work Ethic, determination and enthusiasm - Do you have the same work ethic and will you both be willing to put those extra hours in at home? (will one be watching Netflix, whilst the other is chasing new business leads). Does your friend have a drive for success that is unstoppable and inspiring? Is there commitment to the business unquestionable?
3. Persistence - With a large percentage of startups ending in failure, you need someone by your side that will remain persistent and dedicated through the challenging times.
4. Define your specific roles - It is imperative that before you go live with a business you have a clear understanding of what each others roles are, what you shall be doing and who is responsible for what (write it down and sign it off formally). Unfortunately this was a mistake I personally made and it caused tension, arguments and a lack of service to our clients.
5. Do you compliment each other - If you and your friend have the same experience and skills, you may end up tripping over one another. For example: two shy and reserved professionals may get along splendidly, but if you’re both hesitant to go to networking events and drum up sales, your business may suffer. Look for someone whose strengths falls squarely into your area of weakness, and you’re far more likely to be appreciative of each other’s efforts.
6. Boundaries "Business is Business" - Your friend, the potential business partner should be respecting you as a professional. Occasionally friends will use the positioning of the personal relationship to perhaps cancel meetings, viewings, networking and client prospecting. This is why having clear parameters as to how to treat one another in a fair and businesslike way can preserve your friendship. A written contract is usually a good idea. It does not need to be a dense forest of legalese; even a one or two-page document will suffice, as long as it lays out the critical basics, such as payment terms and the nature of the collaboration.
7. Vision, reason and exit - Do you both have the same vision for the business. Have you thoroughly discussed and formally planned the short, medium and long term vision of where the business is going? if so were you views the same. Your reasoning is important, for example one of you may want to generate enough income to replace their previous job, the other may want to take over the world and pump all profit back into the business. What is your exit plan... is it to develop, scale and sell. Perhaps your friend/partner wants to retain and eventually begin investing profits? This is a vital conversation to have in the early stages.
Summary
Starting a business with a friend can be one of the greatest experiences of your life and the reason for having an extremely successful business. But it is not a decision to make lightly.
You will often spend more time with your business partner than you will with your own family, so please use the above to VET your potential partner. A good friend does not always equal a good business partner. When you work with a friend, your relationship will change. It's inevitable.
But how it changes, how it impacts your business - for better or worse - is up to you.
The purpose of this blog is to
offer a thought process and a check list in order to know you are making the right decision. If all of the above ticks the box, then you are going to have a very successful business.
Aaron Knightley
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