Wednesday, July 24, 2024
HomeNewsShould You Start A Business With Your Friend? Advantages & Risks

Should You Start A Business With Your Friend? Advantages & Risks

Starting your business with your friend has its risks. For it to work out seamlessly, you both have to be aware of the risks and work continuously to ensure you remain friends and the business thrives.

We look forward to weekends because during the weekends we get time to hang out with our friends. We get to share ideas and take part in different activities together.

For some people, these friends might also be friends from work. Other people prefer to separate work from their social lives. However, how would it be if we worked with our friend on a project that both of you are interested in?

block 662ab3424a1b31 33637619

That is the question this article aims to answer. Should you start a business with your friend?

Read Also: How to Start a Business Step By Step

What is at Stake?

Starting your business with your friend has its risks. For it to work out seamlessly, you both have to be aware of the risks and work continuously to ensure you remain friends and the business thrives.

Your friendship might be at stake. Business can be very trying at times. Most of the time, things do not work out as they are laid out in a business plan.

Photo of a group of people working on a business together. /FILE

In business, you have to innovate on the spot and under high pressure. This pressure might strain your friendship as you try to call each other out and hold each other accountable. Hence, when starting a business with a friend, you risk losing a friend.

You might also risk losing the business. If you establish the business on the basis of a friendship and that bond is severed, the business will also most likely fumble at best and fail at worst. Therefore, you stand at risk of losing a friend and your business.

Risks of Starting a Business with Your Friend

Like with any other business, there are risks involved. Starting a business with a friend has its risks, too. 

First, your relationship might become just about business. Once you start a business together, you might find that your friendship might morph into a business relationship. All you talk about is business-related. The times you meet, you do so because of the business.

READ ALSO  ICPAK Hiring Manager, Standards & Technical Services, Assistant Manager, Business Development & Senior Officer – Audit Quality Reviews

This is not a bad thing; however, the business robs you of a friend, socially. Secondly, the bond of friendship that fueled your partnership might weaken, threatening the existence of the business down the line.

On the flip side, the business relationship might be too casual. A casual nature of doing business is dangerous for business as it breeds complacency. Complacency allows for mistakes to creep in and eat away at your business.

The casualness makes it difficult to hold your partner accountable. This is detrimental to the business, and if the business fails, it might break your friendship too.

Additionally, starting your business with a friend can be limited in terms of the networks that you have. Most likely, your and your friend’s social circles overlap. Hence, you share in your network.

Both of you need to be aware of this and work intentionally to broaden your network beyond what you already have.

Read Also: Unique Business Opportunities to Pursue in Nairobi

Advantages of Starting a Business with Your Friend

As much as there are risks to starting a business with your friend, there are also advantages. For instance:

You know each other well 

Starting a business with a friend is advantageous because you both know each other well. You understand each other’s strengths and weaknesses.

Therefore, you can stand in for each other when the need arises. Knowing each other well can help in keeping each other accountable and also in helping each other to learn and grow.

You communicate well

The fact that you are friends to start with means that you communicate well. Communication is a big part of any partnership, be it social or business-related.

All you need to do now is establish how you will conduct business communication versus social communication. The good thing is that you already have the foundation set.

More time together

You get to spend more time with your friend. In the current corporate society, where you can only see your friends on the weekend, you get to hang out with your friends every day.

This will benefit you socially, but it will also be good for business as you will bond more, making the business partnership even stronger.

Similar values and beliefs

A good business is run on the foundation of core values. The business has to embody these core values to deliver on its mandate.

READ ALSO  Jason Whitlock slams Caitlin Clark’s critics as ‘angry lesbians’ who don’t understand ‘what’s best for business’

If you start a business as friends, you already share core values and beliefs. Your shared values and beliefs can guide your business’ values and beliefs too.

Read Also: Money & Me: A Sordid Tale of Loss, Trying Business after Job Loss

How to Start a Business with Your Friend

How do you go about starting a business with a friend?

Communicate 

As friends, you already have a head start since you have figured out communication. The seamless information that passes back and forth in the business allows for prompt responses to matters arising.

A man and a woman interacting at work. /CHARTHOP.COM

As friends and business partners, you need to ensure the information highway is open and you are constantly communicating. It is vital that you communicate the direction of the business, the vision of the business, and everyone’s expectations of the business.

Establish clear roles from the beginning

Ensure that you establish clear roles from the beginning. Your friendship might tempt you not to establish a structure for doing things.

The lack of a structure with clearly stipulated roles is a detriment to the business. It will curtail business growth, hinder scaling and delegation, and even make it difficult to hold anyone accountable. 

Conduct business in writing

Ensure that you are conducting business in writing. Establish work emails that you will be using to communicate business. Ensure that all assignments are documented, with deliverables stipulated and timelines set.

Do not let the casualness of your friendship sip into the business. This will help with accountability. It will also reduce the need for you to rely on your friendship to get things done, which will exhaust your relationship.

Set milestones and mutual goals

Set clear milestones and goals so that both of you understand what you are building towards. The best is to have them in writing, and this concretizes them.

Ensure that you align with the goals and milestones and that these goals and milestones benefit the business; do not cater to your egos or the desires of one person only.

Read Also: 7 Signs That Your New Business is Destined to Fail

Questions to Ask Before Starting a Business with Your Friend

Do you trust your friend?

Trust is vital for a business partner. Your friend might be a good friend in another arena of life, but do you trust them to be good partners in business?

READ ALSO  ‘I was almost blocked from accessing my office by police’ – Sifuna

Do you trust them with work, money, relationships, or trade secrets? If you trust them, you are good to go.

Do you share a similar mission?

You might be on the same page when it comes to starting a business, but do you share in the growth trajectory? Your mission drives how you will build the business. Hence, both of you need to be on the same page on this too. Otherwise, as soon as you get the ball rolling, divergence will start to show.

Do you have complementary skill sets?

A partnership should be complimentary. Your partners, especially in business, should have expertise in a different area from yours.

These forms of partnership help build a better business. Ensure that you and your friend have complementary skill sets.

Could you start this same business on your own?

If it is not a business you could start on your own, then probably it is not the best business for you to start with your friend. You might be overleveraging the input of your friend, which might disappoint you. 

Are you both willing to invest the same amount of time and money?

While partnering to start the business, you need to be exposed to the same risk. If any of you have a lower risk, they might not be incentivised enough to go above and beyond for the business when required to.

Read Also: Factors That Kill Microbusinesses

Wrapping Up

Starting a business with your friend can go both ways. It is dependent on a lot of factors that have to be well thought out before going into business together.

Ensure that you establish great communication channels, conduct business in writing, align your vision for the business and hold each other accountable. These things will empower you to thrive in business.

This article originally appeared on Money254. Money254 helps consumers and business owners to search, compare, and apply for financial products in Kenya.

A photo of two friends on their phone. /PEXELS

WATCH VIDEO

DOWNLOAD VIDEO

YOU MAY ALSO LIKE
- Advertisment -

RECENT POSTS

- Advertisment -
- Advertisment -