Going into business with a friend can be a rewarding experience, but it also comes with potential challenges that can strain the friendship and maybe even cause financial stress. It’s often recommended to avoid going into business with a friend who you wouldn’t want to lose.
Before making this important decision, consider asking the following six questions to ensure you both are on the same page and can navigate the business relationship successfully:
WHAT ARE OUR SHARED GOALS AND VISION FOR THE BUSINESS?
Make sure you and your friend have a shared understanding of the business’s purpose, goals, and long-term vision. Misalignments in objectives can lead to conflicts down the road.
HOW WILL ROLES AND RESPONSIBILITIES BE DIVIDED?
Clearly define each person’s role and responsibilities within the business. Establish who will be in charge of different aspects of the venture, such as finances, operations, marketing, and decision-making.
HOW WILL WE HANDLE DISAGREEMENTS AND CONFLICT RESOLUTION?
Discuss how you will approach disagreements and conflicts that may arise. Establish open communication channels and agree on a fair and objective process for resolving disputes.
WHAT ARE OUR FINANCIAL EXPECTATIONS AND CONTRIBUTIONS?
Be transparent about each person’s financial expectations, including initial investments, profit-sharing arrangements, and how any losses will be managed. Avoid assumptions and put all financial agreements in writing.
HOW WILL WE MAINTAIN WORK-LIFE BALANCE AND BOUNDARIES?
Going into business with a friend can blur the lines between personal and professional life. Discuss how you will maintain a healthy work-life balance and set boundaries to prevent business discussions from dominating your personal interactions.
WHAT HAPPENS IF ONE OF US WANTS TO EXIT THE BUSINESS?
Address the possibility of one of you want to leave the business at some point. Determine how a buyout or exit process would be handled to avoid potential conflicts in the future.
It’s essential to approach these questions openly and honestly, considering each other’s perspectives and expectations. If you find that you and your friend have compatible visions and a strong ability to communicate and handle challenges together, you may have a solid foundation for a successful business partnership.
However, if there are significant disagreements or uncertainties, it might be worth reconsidering the decision to go into business together to protect your friendship and avoid potential conflicts in the future.