Sunday, April 2, 2023

Why You Should Think Twice Before Starting A Business With Your Friend

Why You Should Think Twice Before Starting A Business With Your Friend

Close friends might seem like the best people to start a business with but that’s not always the case. You’ll find that the very same benefits we derive from friendship can also cause major potential problems when we transport those friendships into the less forgiving world of business. Friendship in business comes with bags of problems and I’ll lay them out for you.

Everyone suffers from “Who’s-Really-the-Boss” Syndrome.

Unless roles are very clearly defined, a 50-50 business partnership carries the risk of leadership ambiguity. This can quickly trigger power struggles, affecting all aspects of the business including differing opinions on the company’s vision, strategy, and daily operations.

Familiarity breeds contempt.

Knowing so much about one person can sometimes erode mutual respect. Similar to the struggles within marriages, this is also a major minefield for business friendships because you’re so embedded with the knowledge of one another’s personal lives that you lose that professional respect.

Situations can quickly get awkward and uncomfortable.

Friends go to friends for support. There’s nothing wrong about that, but when one partner frequently slacks off and thinks the other will consistently pick up the slack, the costs will be incurred by the business. Endorsing unproven or incompetent friends to be part of your business will all but guarantee failure.

Your social networks overlap.

Because long-time friends generally share the same set of acquaintances, you start off with a more limited network, market, and support structure for your business than if your co-founder had been chosen based on expanding your business opportunities.

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There might be exceptions though, and in case you really want to start a business with your friend, you need to ask yourself these crucial questions.

1. Do you share the same business goals?

It’d be a red flag if one of you wanted to build a lifestyle business that could last decades, and the other had the goal of creating a high-growth business that could be sold within a year or two. These fundamental differences in growth strategies would lead to conflict.

2. Do you share the same values?

Just like dating, if your friend (and potential business partner) has a drastically different set of value and beliefs, you should think twice about mixing your finances and futures together.

3. Do your skill sets complement each other?

Make sure you’re starting a business with your friend because it will truly benefit you both, not just because you spend a lot of time together and you think it’d be fun. Make sure you are on the same level of  inteligence so that one of you doesn’t have to carry the other through difficult situations. If one of you is weak or too smart, the business will definitely not work. Trust me on that one.

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4. Do your work habits align?

Be sure that you have mutual times you can work together on your business, especially while it’s getting started and you’re both still holding on to other obs that you might be doing..

5. What’s your default strategy for resolving conflicts?

If you argue a lot as friends… chances are, that tendency will carry over into your business. So make sure your friend is someone with whom you easily reconcile.

6. Which specific roles and responsibilities should each business partner assume?

Clearly define your complementary roles, and make sure they engage your interests.

7. How stable are your personal lives?

You don’t want to start a business with a friend who plans on selling their belongings and traveling the world for the foreseeable future.

8. Are you both willing to follow each others direction when the subject matter expert speaks?

Be sure you can both handle constructive criticism, and know when to trust your partner’s judgement.

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