There’s no denying that starting a business with friends is incredibly exciting. But before you get caught up in the excitement and make a website online or tell all your other friends & family members about your new business venture, there are certain things you need to be aware of.
If you’ve been considering starting up a business with your pals, this article was written with you in mind. Without further ado, here are five things you need to know before starting a business with your friends.
1. Define Your Roles…
While every friend can proudly boast the title of “co-founder,” it’s crucial that everyone has a dedicated role in the business right from the get-go. Naturally, these roles are determined by the nature of your business, but it’s a good idea to make sure the following roles are filled:
– Chief Executive Officer
– Operations manager
– Marketing manager
– Financial manager
– Customer relationship manager
– Administration manager
Especially during the early stages of starting a business together, collaboration is critical. But that doesn’t mean that roles shouldn’t be clearly defined. Running a business isn’t a guessing game of “who does what” and nor should it be.
Not only will establishing clear roles in the beginning help streamline your business and ensure that everyone is accountable, but it will also prevent having awkward conversations down the line.
2. And Make Sure Those Roles Align with Your Personalities
The roles that are allocated to different members of your friend group can’t be decided by personal preference or by who wants to update their LinkedIn job title to what. All role allocations must be made with each friend’s unique strengths and weaknesses at the front of the mind.
For example, it’s probably better not to make that friend who is always running “a little late” the operations manager or assign the role of the financial manager to the friend who always pays for everyone else’s drinks at the bar.
Take a look around your friend group and establish which friend is reliable in which areas. Using the role examples listed earlier as guidance, here’s a brief overview of which strengths are suited to which roles:
– Chief Executive Officer: Crisis management skills, communication skills, ability to build relationships, prioritization skills, and the ability to motivate those around them.
– Operations Manager: Communication skills, negotiation skills, logistical thinking, and exceptional organizational abilities.
– Marketing Manager: Creativity, sales-minded nature, excellent people skills, social media know-how, and story-telling skills.
– Financial Manager: Flair for numbers, analytical thinking skills, communication skills, problem-solving abilities, and the ability to work independently.
– Customer Relationship Manager: Strategic thinking skills, direct marketing skills, big picture thinking skills, and above-average communication skills.
– Administration Manager: Time management skills, organizational abilities, communication skills, planning skills, and the ability to work autonomously.
3. Make Sure Everyone is Equally Invested
And we’re not just talking about the financial investments into the business. All members of the team need to be invested in the success of the company and be willing to put in the necessary effort to achieve said success.
The good idea is to have each friend commit to a set amount of time per day or per week that they can dedicate towards the business. That way, no one person will end up doing the bulk of the work while the rest just cruise along.
If a certain friend isn’t pulling their weight, try holding an interfriendtion to make sure that everyone is on the same page before turning to more drastic measures.
4. Understand it Won’t All Be Fun and Games
Granted, starting a business with friends is inherently fun. But that doesn’t mean this will always be the case—and that’s a good thing. For the most part, business isn’t supposed to be fun and is often accompanied by stress, frustrations, setbacks & backslides.
While cracking jokes and going to “work” in your pajamas is part & parcel for starting a business with your friends, that’s not all it consists of. You need to make sure that all friends who form part of the business are prepared to deal with the serious side of starting and running a business.
5. Keep Business Separate from Friendship
This last one is tough to do, after all the whole point of starting a business with friends is for that very reason: they’re your friends. But at times, it’s incredibly important to separate business from friendship to avoid the relationship being strained in either regard.
There’s a reason why the saying “don’t mix business with pleasure” remains so popular to this day. There are fine lines that, in the world of business, cannot be crossed. To avoid blurring and eventually crossing these lines, keep the following dos & don’ts in mind:
– Do have an HQ: Whether it’s a corner of a coffee shop or a space in a co-working facility, all businesses need a dedicated headquarter. It’s in this HQ that all business-related meetings must be held, all strategies must be planned, and all documents must be signed. Keep such dealings away from the homes of the friends involved.
– Don’t start a business together just because you’re friends: You need to be sure that you’re making the decision to band together with your friends because you all believe in the business and collectively have what it takes to make it work.
– Do have a written business plan: A solid business plan is the backbone of any business, but a business plan that’s stored solely in your mind won’t do any good. Make sure that your business plan is in writing and that each member of the team has a copy of it.
– Don’t let the statistics get you down: Starting a business is a risky business. There’s no way around that. Even though it’s estimated that 50% of small businesses fail within the first 24 months and people may think you’re mad to start a business with your buddies—use these statistics & the opinion of naysayers as fuel to your fire to succeed.