Contributed by Frank Hamilton.
Starting a business is an exciting adventure. It’s understandable why some people choose to do it with friends. After all, who could be a better partner than your best friend?
You might be surprised by the obstacles you could face as friends in business together, though. Here are just seven reasons to think again before you launch a business with your buddy.
1. Friendship Doesn’t Equal Business Compatibility
One of the biggest—and most disappointing—surprises about starting a business with your friends is realizing your friendship doesn’t automatically mean business compatibility. In fact, it is often quite the opposite. If you can’t find a way to manage the business together, you won’t make it far.
One challenge in running a business is that there are certain tasks that must be performed on a daily basis. Your friends might end up being the ones performing these day-to-day tasks. If they feel like they should be the ones in charge, they might rebel and stop doing what they should be doing.
2. It Will Be Challenging to Define Business Roles
There will be some kind of hierarchy in your newly formed business. But the difference between a friendship and a business is that friendships don’t have pre-determined structures with clearly defined roles. You will need to start brainstorming what each person should do—and that often leads to conflict.
One way friends can try to resolve this issue is simply by avoiding it. If they don’t define roles, then nobody will be angry, right? Beware, though, because a lack of hierarchy in a business can lead to its failure.
3. The Price of Failure Is Much Higher
When working with friends, the price of failure is great. Remember that about half of all businesses fail during the first two years of their existence. Business failure obviously affects you financially and professionally. But if your business doesn’t succeed when you’re working with friends, you will also be affected on a personal level. Can your friendship survive?
4. Your Business Goals May Differ
Be sure to thoroughly assess your goals and motivations. While you might want to launch a business because you want creative freedom, your friend may want financial success. When motivations vary, goals often turn out to be different too.
Having different goals can lead to ineffective efforts. If you really want to achieve something, you will need to concentrate on one single aim.
5. Emotions Often Override Common Sense
Emotions can be incredibly effective in ruining both your workflow and your relationships. If you let them control and manipulate you rather than controlling them, emotions can ruin your startup.
When your friends make a mistake, you may be more likely to forgive them for it because they are your friends. You might be less objective during essential business decisions and less likely to act according to reason.
6. Such Businesses Often Lack Expertise
Businesses based on friendship often lack expertise. Are your friends really suited to the roles you need in a startup? Of course, to solve this, you can look for professionals to add to your team, but what use are your friends then?
7. Your Finances Will Be Quite Strained
If you’re relying solely on funding from your friends, you may quickly run into trouble. With no actual influx of capital into your business, you’re looking at a dangerous mix of emotions, finances, and ego. If one of your friends invests more, will they expect more control? Do feel comfortable asking for more money? What are the terms of repayment?
Carefully consider all the disadvantages of starting a business with friends before you do it. While there are some stories of success among business partners and friends, there are many tales of friendships falling apart in the process (just look at Mark Zuckerberg and the creation of Facebook). Identify the obstacles and move cautiously forward if you’re will to take the risk.
Frank Hamilton has been working as a translator at The Word Point. He is a professional writer who focuses on blogging, digital marketing and self-education. He also loves traveling and speaks Spanish, French, German and English.
Categories: BUSINESS GROWTH LEADERSHIP STARTUP WORK-LIFE INTEGRATION