Turning your best friends into business partners is the dream. But it also feels like a double-edged sword because, to an extent, you are putting your friendship in line. However, all you need to have a successful business partnership with your friends is a few tips and the right strategies. Friendships have proven to be the backbone of a lot of thriving and successful businesses. Before you take the leap this summer, this is what you need to consider.
Decide On the Best Business Idea
Qualities that make you great friends don’t necessarily make you the best partners. Keeping that in mind, you have to come up with a business idea everyone can contribute to. It has to favor the different talents and abilities in the group. How to start a Powersports dealership, for example, will need one of you to have a keen interest in the industry. You should know that partnering with the wrong people is one of the rookie mistakes most entrepreneurs make.
But you have the upper hand because you understand your friends well and know who can do what and who can’t. Once you agree on an idea, decide on individual roles based on strengths. Everybody has to understand what they will be doing to push the business forward before you begin.
Have Everything in Writing
Every business is different, and whether or not you will need a limited liability company (LLC) or doing business as (DBA) will be decided among you. But you should have some form of formal paperwork about your partnership in place. Most friends who enter businesses together ignore this tip because it sounds offensive to ask a close friend to put things in writing.
It doesn’t indicate any mistrust or make you a prophet of doom; it’s simply a wise business decision. You should start avoiding getting emotionally involved in every business decision. Be rational and consider every possibility to ensure success. Have a detailed written agreement that protects individual interests and covers all possible scenarios. It’s also beneficial to have all the tough conversations out of the way early on.
Figure Out Finances
The start-up cost for many businesses is high and as you know money has a funny way of coming between people. You should figure out where your funds will be coming from as a group. Welcome ideas from every friend; it pays to include everyone.
If you are going to get a loan or have everyone give a percentage of the funds, the terms should be very clear. You should then open a business account that you and your friends can all access. The best trick to a successful friendship-based business is to hire an accountant to handle all the finances and the account. That will depersonalize any money-related issues in the future.
Learn How to Solve Conflicts
Conflicts are inevitable in business, even with the most compatible partners like friends. How you handle disputes will make or break your business and friendship. It would help if you kept nurturing your friendship because otherwise, you might lose what brought you together, and it will be bad for business.
Conflict resolution is a significant part of business management; have some strategies laid down for when you will need them. Open communications should be one strategy; if you are in a challenging situation, speak and encourage the rest to do the same. It’s not always bad, so learn to celebrate small victories and enjoy the process. Most entrepreneurs who thrive agree the best part is working with your closest circle of friends, having fun, and sharing the same passion.
Starting a business with friends is not the same as others. It comes with many emotions and strong bonds, which can be assets and liabilities if you can’t figure out how to navigate them correctly. Once you have everything well elaborated in a business plan and ambitions and goals, you will easily succeed.