Are You Thinking of Starting a Business with a Friend? Read This First!
Are you thinking of starting a business with a friend? Read this before you do.
Q: A friend and I have a fantastic idea, and we can't wait to launch a business together. But although we've known each other for years, I've never worked with her. What if our business venture starts to affect our friendship?
A: Partnerships are serious business, and many people who start together often end up going their separate ways. This isn't to say that a partnership can't last if handled correctly, but partnerships are a lot like marriage -- much easier to get into than out of!
Here are some tips:
1. Decide why you need a partner.
What does she bring to the table that you do not? What skills does she have that you need for the business model? Does she share the vision in the same way you do? How much of the vision? What role does she want to play? Are you launching with her because you are scared to launch the idea on your own? You have to take off your "passion goggles" and answer these questions before you move forward.
2. Discuss how you'll deal with conflict.
If the answers to the above result in her bringing a unique skill set to the table, a shared vision, an agreement in workload, and a willingness to be open about all of this, the next step is to talk about how you will deal with conflict. There will be, as much as you doubt it now, moments when you disagree or truly want to go a different direction. The best rule of thumb here is to defer to the business model and decide that all decisions must be put through a filter that supports your shared vision. What is that filter? How will you make decisions on how to spend money? What is your metric for success? Resolving conflict and strong communication skills are a must!
3. Get it in writing, and make sure you have adequate legal advice.
Ladies Who Launch published a whole series of articles on building a partnership and the key ingredients to a long-lasting business arrangement. Some of those tips include: A written agreement that states what happens if one of you wants to get out or if one of you wants the other to get out; how you will divide assets; what happens if one of you dies or becomes disabled; and certain parameters of ownership that deal with who brings capital and who brings other valuable equity outside of cash. As fun as it sounds to say "let's just do it," a partnership is not that simple. You have a history of a good relationship, which is great, but you also need to know how this friend sees the business fitting into her life going forward. Make sure your agreement is solid and that you are comfortable with every single scenario. The goal is to launch a successful business and to keep the friendship strong. Doing your homework can allow for both!
Text by Amy Swift, Editor in Chief of Ladies Who Launch