Tips for Going Into Business with Friends or Family
If you've ever started up with a friend or family member, what is one thing you recommend someone do in advance to preserve that relationship if the business goes sour?
No. 1: Set Boundaries and Rules
From Amanda L. Barbara of Pubslush: Establish clear-cut rules to guarantee a strong partnership with your friend or family member. And remember: communication is key. Be honest, trust each other and play off each other’s strengths to promote success.
No. 2: Get Your Legal Documents in Order
From John Berkowitz of Yodle: It doesn't matter who you are starting a company with -- it could be your best friend, a family member or a complete stranger -- you should always have sound legal documents in place. Talk through the worst-case scenario and agree on how disputes will be resolved. Having this conversation when everyone is optimistic and excited will make it easier to keep your relationships intact.
No. 3: Communicate
From John Rampton of Host: Know what's expected of both parties upfront and if the business goes sour you have contracts to back everything up. Communication is key through thick and thin. If the business is going well, make sure everyone communicates it. If it's going down hill; the same. Express thoughts and feelings out loud so the other doesn't have to guess. It'll save any relationship.
No. 4: Stop Talking About Work
From Simon Casuto of eLearning Mind: It’s important to maintain your personal relationship, otherwise your business relationship could crowd it out. Do things together outside of work and don’t talk about the business. If your relationship outside of the company remains strong, you’ll be able to work through the tough times when it comes to work.
No. 5: Set Specific Written Expectations Right Out of the Gate
From Joshua Lee of StandOut Authority: If you can avoid starting up with family or friends you've had for many years, do so. If you're determined to test the waters of your friendship, then make sure expectations are clear right out of the gate. Write them down. Go back and forth. Written documents have a permanence. Failure still hurts. But there's clear separation between the business and the personal.
No. 6: Discuss Time Commitments
From Laura Roeder of MeetEdgar.com: Get clear on exactly the time, energy and financial commitments all parties are putting in. Future changes in those areas will impact your initial agreement. I've seen many cases where one co-founder starts spending the majority of their time on other projects. What will you do if this happens? What if one person needs to take on more outside work to support themselves?
No. 7: Listen to Each Other
From Jessica Richman of UBiome: The other person's story always makes sense to them. Listen and try to understand where they are coming from. Even if things go south, they will remember that you tried to listen and see it their way.
No. 8: Don't Point Fingers
From Adam Stillman of SparkReel: If the business is going sour, no matter what your role is, it is the co-founders fault. That is the cross you bear. Even if you're in charge of marketing and the technology is what's hurting you, then you did a bad job picking the technology. Take genuine responsibility and talk about solutions as opposed to playing the blame game.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.