Important Dos And Don’ts You Should Know Before Starting A Business With Your Friend

Have you considered starting a business with your friend? Here are some important things to know.

Starting a business with a friend can be a rewarding experience with countless opportunities.

It might be really alluring to consider creating something with a trusted partner. However, it’s imperative to take into account a few key aspects before jumping into a commercial venture with a friend.

In order to ensure a smooth entrepreneurial journey, there are some important DOs and DONTs you should consider. In this article, we will discuss some important things to know before starting a business with your friend.

Dos of starting a business with your friend

1. Establish channels of communication

Communication is key therefore it is important to establish clear channels of communication from the beginning. Communicate openly and honestly, promptly address any concerns or conflicts, regularly discuss business matters, and share feedback as well.

2. Define roles and responsibilities

To ensure a seamless workflow, it’s crucial to clearly define each team member’s roles and responsibilities within the company. Make sure to assign tasks according to each individual’s strengths and expertise.

3. Draft a legal document

To make your partnership more solidified, it is advised that you consult a lawyer to draft a formal legal agreement.

This written document will spell out each partner’s ownership stakes, how earnings will be split, how decisions will be made, and the procedures to be followed in the event of a dispute.

4. Financial Considerations

It is important to discuss financial issues upfront such as how the initial funds will be invested and the investigation of other funding options. Also, create a detailed financial strategy including estimates for revenues, cost allocation, and profit sharing.
Whether each partner will contribute equally or proportionally, it is crucial to determine how financial decisions will be made.

5. Set boundaries

Clearly set boundaries between your personal and professional lives by establishing guidelines for discussing work matters and strive to find a harmonious equilibrium between the two.

6. Celebrate milestones together

As a team, acknowledge and celebrate your milestones as a team. Recognize each other’s contributions and show appreciation for the hard work and dedication put into the business.

RELATED: 7 Types of Friends Every Woman Needs To Have In Her Circle

Don’ts of starting a business with your friend

1. Don’t overlook legal considerations

Relying exclusively on confidence without a documented agreement can lead to future disputes. Avoid assuming your friendship to shield you from future issues. A well-drafted legal agreement lays out a clear path for dealing with diverse situations.

2. Don’t dodge difficult conversations

Don’t dodge difficult conversations but confront them head-on. Letting conflicts slide by under the carpet can breed resentment and jeopardize your friendship and business. Address problems as soon as possible, actively listen, and work together to find solutions.

3. Don’t make assumptions

Make sure you and your partner have a clear knowledge of your expectations and the direction the company is taking.

Even if you know your friend well, making assumptions about their motivations, work ethics, or objectives can result in miscommunication.

4. Don’t let personal issues interfere with business

Keep personal disagreements separate from business decisions. Avoid making decisions based on your feelings. Keep the interests of the company in mind and handle disputes professionally.

5. Don’t overlook individual growth

Support each other’s personal and professional development. Encourage skill development by attending workshops or training together and remaining open to learning. Individual development adds to the general success of the company and improves your cooperation.