Starting a business is a challenge in itself. But what about starting a business with a friend? With similar interests and a strong relationship, entering the business world with a buddy could be a natural fit. However, it's important to fully understand what you're getting into and how your dynamic might change once you're business partners.
Business News Daily talked to friends who have successfully started businesses together to get their tips on navigating personal relationships in a business context, plus the unexpected benefits that long-term friendship can bring to your work.
1. Test the waters.
The stakes are high when you start a business, especially if it involves a lot of startup capital. To find out if you and your friend will work well together before you make that investment, test the waters on a smaller venture. [Read related article: The Dos and Don’ts of Writing a Great Business Plan]
Hansel Lynn and Wayne Teng collaborated on several projects, including a rock band when they were younger, before they founded theCoderSchool together. Based on their previous collaborations, they were confident that they could work well in their current business.
"Look back at how long you've been friends and what type of group dynamics you've been in together," suggested Teng. "If you've [been on] teams together, go back and look and think, 'Did that work out, or were both of us just wanting to be the best and went after each other?'"
"Based on having worked together in different capacities, I was pretty sure it was going to go well," said Lynn. "But I don't think all best friends can do it."
If you and your friend have collaborated and supported each other successfully in the past, there's a strong likelihood that you'll work well together in a business setting too.
2. Agree on a mission.
Very early on in the process of launching your company, you need to establish the core values that guide your business decisions.
"Having the same values is important because, as you grow, you will hire, fire and lead by these values, and if you both are not completely aligned, then you will find it very difficult making hard employee and corporate decisions," say Ashley Morris and Jason Smylie, owners of the Capriotti's Sandwich Shop franchise.
As friends, you likely already have many values in common. But don't take that for granted: Explicitly define those values and discuss how they relate to your business.
Lynn and Teng agreed from the start to prioritize education over profit in their business, and that core mission drives many of their decisions. It also helps them predict what the other one will choose or do in a given situation, which prevents conflict and indecision. "Because both of us feel the same way, we can make decisions more easily," they say.
3. Establish roles early on.
Who is the big-picture thinker? Who loves dealing with people face to face? Does one of you know more about marketing? Your friendship gives you insight into each other's personalities and abilities, which will help you assign roles and responsibilities within the company.
"Know each other's strengths and weaknesses," suggested Cathy Deano and Renee Maloney, founders of Painting with a Twist. "Split up duties and then that person 'owns' the duties. The other person can chime in, but having ownership of a department or project empowers the person and builds trust between the partners. The only area where this isn't done is when financial decisions need to be made, as both partners need to be a part of these conversations."
There will be times in the partnership when you need to agree to disagree and move forward. Without clear roles, this can create a stalemate, which may end your partnership and friendship, said Morris and Smylie. They advised creating a hierarchy and giving one person the authority to make final decisions.
"This will be the person who has the ultimate say if you don't agree," they said. "Make sure you both fully agree that you're OK with that person having the power."
4. Put it all on paper.
Alex Arlotta and Summer Vasilas, co-founders of Waxing the City, recommend drawing up a business operating agreement before you make any other decisions. This sort of agreement separates your business and your friendship, establishes parameters for decisions like expanding or dissolving the company, and keeps any potential issues black and white.
"The start to any new venture is fun and exciting, but life happens, and people's views and opinions change," said Arlotta and Vasilas. "You don't want those changes to affect the business as a whole. Just like a prenuptial agreement, you hope you never have to use it, but [if] you do, it makes things a lot easier."
"Treat it like going into a marriage – really talk it through," recommended Lynn and Teng. "Do it correctly legally upfront, but if things go well, hopefully you never have to look at it."
5. Appreciate the surprising upside.
Despite the challenges of entrepreneurship, business owners who work with their friends agree that the biggest advantage of starting a business with a best friend is just that: getting to work with your friend, laughing, having fun, and knowing that the passion you share for the industry and business will carry you through the hard times.
Lynn and Teng are setting up a business trip to the East Coast, and the planning is making them both appreciate the surprising benefits of working with their best friend. "Back in the corporate world, I would have dreaded a business trip," said Lynn. "But we're making it kind of a boys' trip. One day we'll see Boston, the next we'll be working."
"Small business becomes your life, [but] having your best friend be part of it makes it that much easier," agreed Teng. "If I have a bad meeting, even if he's not there with me, I can text him. He gets it exactly, and we'll laugh about it … Who else can you actually have that kind of conversation with?"
Additional reporting contributed by Jennifer Post.