When contemplating starting a business with a friend, ensure that you understand everything that you’re getting into. It can be extremely rewarding but it can also be extremely tough with its own challenges to face. Starting a business with a friend is a little like deciding to get married – make sure you know your friends’ habits and personality first!
It can be great to have two people putting their heads together to put plans and strategies in place and this can have it’s benefits when pitching to new clients and overcoming nerves especially when this is a ‘first-time’ challenge.
It can also be great to have two people bouncing ideas off each other and working out the best way forward for the business. Two heads are better than one, right?
Yes correct, but don’t put the blinkers on – there will be challenges, so make sure you’re aware of what’s to come before it’s likely to happen.
Here are 5 tips on starting a business with a friend – BEFORE you start your business…
Work together first
You can know someone for a lifetime but the way someone acts and conducts themselves in a social setting can be completely different to how they are in the workplace.
Working with someone before starting a business will give you the knowledge of how they handle work issues, challenges and their business ethics. Can you see yourself working closely and effectively with this person? Do you like the way they conduct business? Do they crumble under pressure?
Define your roles
Often when working with friends, it’s easy to feel comfortable and relaxed whilst going with the flow. However different aspects of the business will need addressing and knowing where you stand and who has what role will prevent heated discussions further down the line.
To do this effectively, each person will need to understand their strengths and weaknesses in order to define the different roles that each person will be taking on. Be clear on what needs to be done and who will be tackling the tasks – and stick to these roles and rules. They may seem insignificant at the beginning but will have a bigger impact later on.
You’re creating a business – not a playground
Yes it’s good to get on well with your business partners, of course, but it’s also not a time to play and ‘be nice’ for the sake of friendship. You are running a business and decisions need to be made. Business planning and targets are necessity for business success and aligning your practices to these plans will help guide the business in the direction you have decided (together) upon. Don’t get stuck with democracy – somethings are just not up for discussion – they just need to be done. If your roles have been defined, there shouldn’t be too many barriers to face.
Have an exit plan
This is probably not something that you thought you’d have to think about in the beginning and especially when doing business with a friend, but it should be!
Having an exit plan in case things go in a direction that you least expect them, will give you confidence in moving forward. Have an exit plan for different scenarios to provide a backup in times of hardship and know that everyone involved is aware of these plans so that anyone can execute them at any time
Learn to trust and rely one another
This may seem a given if you’re starting a business with a friend, but often we take things like trust and reliability for granted.
Running a business in partnership means that you need to have complete trust in your fellow partner and be dependant on them to carry out tasks. If you’re used to being a sole-trader and are now venturing into partnership, it may be hard for you to let go of reins however it is in the best interests for you and the business to put your trust in others, to relieve unnecessary pressure and stress from your end.
Starting a business with a friend is an enjoyable thing to do if you’re both ready to put in 100%. Being aware of these top tips will give you a base to work around and food for thought if you’re still in the decision making stage. Starting a business should be a fun and exciting time, with planning and executing – enjoy every moment!
If you’re looking for financial advice in the startup stage, Kara Accountants can help with business planning, budgeting and forecasting. Get in touch to see how we can help you get started in your next business venture.