Smart or Not: Starting Your Business With a Friend

Features FOXBusiness

A friend of mine from college and I have decided to start a business together. Any tips for making sure that our personal and professional relationships don't clash? Samuel of Rhode Island

The following answers are provided by the Young Entrepreneur Council. Founded by Scott Gerber, the Y.E.C. is a nonprofit organization that provides young entrepreneurs with access to tools, mentorship, community and educational resources that support each stage of their business’s development and growth. The organization promotes entrepreneurship as a solution to youth unemployment and underemployment. E-mail your questions about best practices for starting up and/or managing a small business to smbs@foxbusiness.com.

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No. 1: A Strong Contract = A Strong Friendship
From Colin Wright of Ebookling

Get your paperwork in order right away. You may feel like everything is sunshine and rainbows now, but if something happens down the line, you stand a much better chance of maintaining your relationship if you have documents you can refer to that will settle any issues that arise. In this case, being professional with each other will allow you to keep things casual and safe for both of you.

No. 2: Spend Regular Time Apart
From Lea Woodward of Kinetiva

Start-up mode is intense; you're likely to be spending an inordinate amount of time together and it's inevitable that you'll clash sometimes. Scheduling and spending regular time apart in different social circles will be refreshing and help ensure you both get the space you need from each other. 

No. 3: Design the Relationship
From Michael Bruny of AmbassadorBruny.com

From the beginning, decide how you are going to handle conflict. I have designed relationships with code words that allow both parties to stop what they are doing and listen to each without judgment. Some people need permission to say how they feel for fear of hurting the other party. If the agreement is there from the beginning it's much easier to clear the air.

No. 4: Define Roles as Early As Possible
From Sean Ogle of Location 180, LLC

It's extremely important that you understand what each of your responsibilities are, and respect them. If one person is the creative mastermind and the other person is the financial brains, go with that. Don't feel like you each have to be involved in every single decision in the process. You'll both go crazy and become less productive in the process.

No. 5: Joint Ventures Only Work if You Have Complementary Skills
From Ishita Gupta of fear.less

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Your skills compliment his skills and his skills complement yours. That's the only reason to go into business with a friend unless you're a seasoned entrepreneur. If you're just starting out, see which abilities you have that he doesn't and vice versa. Then focus on those as priorities and make SURE you get something in writing before you start bringing in any money. 

No. 6: Choose Which Is More Valuable
From Logan Lenz of Endagon

Before going into business together, you need to both be on the same page. Decide beforehand which relationship means more to the both of you. Is your personal relationship more important than the success of the business? If you disagree on this, don't move forward together. If you agree, proceed with caution. There is a reason people say "the only ship that doesn't sail is a partnership." 

No. 7: Be prepared to lose the friendship
From Kris Ruby of Ruby Media Group

Doing business with friends or family can get incredibly tricky. The number-one rule of thumb is to be prepared to lose the friend before going into business with them. If you are ok with this, then proceed accordingly. People get "funny" about "money" and issues with your friend may arise that you never knew existed. Discuss your values about investing up front before your first deal together.

No. 8: Prepare for the break up to avoid it
From Kent Healy of The Uncommon Life

People don't go marriage counselors to discuss happy times—they go to confront emotional conflicts. For obvious reasons, it makes most sense to discuss "potential" issues before they become real problems. Although it may sound pessimistic, stir the water before boarding the ship. Design the break up before something happens so you best understand each other and see if there is actually a fit.

No. 9: If You've Never Disagreed, Don't Do This
From Nick Nanton of The Dicks & Nanton Companies

Every business and personal relationship will get strained at one point or another. If you haven't gotten into any serious disagreements about anything with this friend, you're not ready to go into business yet. It's the ability to passionately fight for what you believe in, lose the battle, and still remain friends that will allow you to be successful together.

No. 10: Get a Written Agreement Immediately
From Jason Sadler of IWearYourShirt.com

You've heard it over and over again, but it's true. Get everything in writing. They may be your best friend since Kindergarten, but as soon as money rolls in and opinions clash it can get ugly. Sit down, discuss a partnership agreement and involve a lawyer. It will save you so many headaches down the road and keep your friendship intact. 

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