What to Consider Before Starting a Business with a Friend
Starting a business with a friend sounds so exciting, and it definitely can be, but you need to be sure it’s going to be the right fit before you commit to anything. It’s so easy to get swept up in the idea of starting a new venture together that you can overlook the personality traits that may cause clashes during stressful times.
I can’t tell you how many crafters and business owners I’ve met along the way who formed partnerships with their friends, only to have it end badly. I’ve worked with a few friends on businesses and have been lucky enough to have good experiences, partly due to being compatible in the 5 areas below:
1) Work ethic
Are you on the same page when it comes to getting things done? If one person is a workaholic and the other is a little more laid back, it could eventually cause tension. You may end up balancing each other out, however, try to think ahead to a stressful and busy time like preparing for a craft show.
How do you picture yourself handling the situation when you’ve just had a long day at your full-time job and you have stock to prepare? Now consider how your partner will handle it.
Do you see yourselves on the same page or will your responsibilities in the business leave you with the bulk of the work while they get to relax the night before a big show?
There will always be a bit of imbalance when it comes to workload, especially if you have different skills; the important part is making sure that it’s addressed beforehand so no one feels resentful.
2) Lifestyle
You’ll also want to consider how your lifestyles may work together or clash. Are you both married with families? If you’re on the same page in that area, you’ll be a little more understanding when a child’s soccer practice causes a change in work plans. You should also take a look at each other’s work schedules and personal sleep preferences.
Meeting up to collaborate could be challenging if you work full time during the day while they have a night job that keeps them busy in the evenings. Are Saturday mornings your best time to meet? They may prefer to sleep in and work late into the night. Make sure your schedules will have some overlap so you’re not always missing each other.
3) Finances
How are you going to cover business expenses? What about your expectations for getting paid? Do you both believe you should be putting profits back into the business or getting a salary?
Take the time to chat about how much your business is going to cost to start and run and how that may interfere with your personal finances if you’re not taking out a loan. If one partner has their spouse to support them while the other is buying their first home on their own, you may be relying heavily on one partner’s chequebook.
Money is never fun to talk about but it’s important to set some expectations upfront as to how bills will be split and put it down on paper.
4) Visions
Talk about your goals, not only for the business but in your personal lives as well. You want to be sure you’re on the same page business-wise; you may be working your butt off to turn your small startup into an empire while your partner is looking at it as a fun side project they don’t expect to expand beyond you two.
Be sure you’re not taking completely different paths in your personal lives either; if it’s your partner’s dream to travel the world in the next 2 years, you want to be aware of that.
5) Strengths
Here’s one area where it is beneficial to be opposites. Jot down what you each think your strengths and weaknesses are and who will be responsible for what in the business.
Hopefully, your partner is covering areas you’re not as strong in and vice versa. If you’re both introverts who hate selling and talking about the business, you may have a few disagreements when it’s time to decide who’s interviewing with the local TV station.
If you’ve gone over the areas above and think you’ll make great business partners then it’s time to dot the i’s and cross the t’s.
Put together a partnership agreement and go over possible scenarios for the future if one partner no longer wants to move forward with the business while the other does.
In business, you should put everything on paper, regardless of how strong your friendship is.
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Hey, I’m Erin 🙂 I write about small business and craft show techniques I’ve learned from being a small business owner for almost 2 decades, selling at dozens of craft shows, and earning a diploma in Visual Communication Design. I hope you find my advice helpful!