When you find a friend that shares your passion and excitement for starting a business, it can be tempting to take the leap. However, there are many questions that need to be answered before making this decision. This article will help guide you through some of these difficult decisions so that you can make an informed decision about whether it's right for you!
What type of business are you starting? What does each co-founder need to do in terms of their expertise and skillset? How will this affect the business's long term success or viability? Who owns what percentage of the company--and how did it get divided up originally, if at all? Will one person take on a different role (such as CEO) because they have experience in that area already, or will both founders be equal owners out of necessity for lack thereof.
How you start your business with someone else is very important! You need to make sure that there are no hard feelings if--or when--the decision is made for one person not to continue on with the company full time. Be careful of drawing up an agreement so strictly over who owns what percentage that it becomes difficult or impossible should they want out down the road. If both partners work together and share ideas from day one, then it's much easier going forward. What would happen if something happened at home such as death in family or divorce? Would either party be able to buyout the other?
On one hand, having someone close by could make things easier because there are no surprises about personality clashes, expectations around how much work each person does every day might already be established.
Here are a few pros of starting a business with a friend:
- The best partnerships are typically forged between close friends. When you know somebody very well, it is much more likely that they will feel comfortable disclosing personal information and deeper goals with you; which could save you both time if something goes wrong in the future.
- Although you may have different interests and opinions at times, your friends are most likely driven by similar core values. You and your partner have known each other for a long time, which means you can communicate at length and depth when solving any issue.
- If you’ve known a friend for a long time, they probably have intimate knowledge of what talents/weaknesses that person has (and vice versa). When combined with how well people get along and if there is any trust between them this should allow an appropriate allocation responsibilities across the business without feeling like it's one-sided.
Here are a few cons of starting a business with a friend:
- When things are going well, friends may be able to communicate more easily. But when times are tough, depending on the sort of relationship, it’s often difficult being blunt with someone so close to you.
- Even if you have a defined 50-50 structure, there may be instances where one party works more than the other and feels like they deserve to get paid more. This can cause friction in your friendship or disrupt any peace that was already established when it comes to splitting up responsibilities.