Starting a business with friends can seem like a good idea, but before you jump in and set up a company with people you are close to, you need to be honest with yourself and each other.
If you get it wrong your new business could fail and lifelong friendships ruined. So what steps should you take before going into business with friends, or any business partner for that matter?
We asked entrepreneur, Mike France, who has experienced both sides of this coin, to share his advice on how to successfully start and run a business with friends;
Being in business with friends can be great, or disastrous
The old adage that one should never mix business with pleasure is rather tired, and should not be taken as gospel. Running a business with friends has as much chance of being a revelation as it does a disaster.
The first key to making it work is ensuring that, as with any other business decision, you enter into the partnership with a clear head and agreed shared objectives.
The process of entering into business with a friend needn’t be dissimilar to entering into it with a stranger. Someone will not necessarily be a good match for you as a business partner by virtue of being your friend, and you must be impartial and transparent when deciding whether it can work.
If you know you are not compatible as business partners then you must treat your friend and yourself with honesty. There are countless tales of friendships being forever tarnished by a business, and you don’t want to find yourself in a position where you are faced with a choice between losing an important friendship and risking your business.
When business breaks friendships
I have personal experience of this. In the past I brought a good friend of mine into a business that I was CEO of. After a while it became clear that he simply wasn’t up to the job in hand and I had no option but to let him go.
That was 17 years ago and we have never spoken since. While I regret losing him as a friend I know that it was the right decision for the business.
If you want to avoid the worst-case scenario, before you go into business with a friend, you need to ask yourself the following questions;
1. Do you share the same vision
You need to be able to quickly establish the direction you see yourselves and your company heading in. What is your five-year plan? Your ten-year plan? How are you getting there?
If these are issues you don’t agree before entering into business, the problems will only exacerbate as time goes on.
2. Do you complement each other?
Next you must be clear on your roles. The best partnerships and the best friendships come about when two people complement each other’s personality and skill-set.
One of you may be better suited to the hands-on running of the business, another may be a good public face who enjoys the marketing side of the business. Know each other’s strengths and play to them.
3. How do you work under pressure?
It also helps to have worked together previously. How you behave in a pressurised working environment does not necessarily correlate with how you behave in your leisure time. Having some idea of what awaits when you are working together will prepare you better.
Honesty of friends can help your business thrive
Once you have entered business it is imperative that you are transparent and candid with each other. This is an area where working with friends has potentially huge benefits. You can be honest with each other in a way you would not be with a stranger, you can bounce off each other’s ideas.
With concerns about politicking out of the way and the propensity to be more open and honest, the potential to advance your business is enhanced.
Honesty is good, but prudence is equally valuable. Disagreement and challenging each other are a good way to analyse your personal performance and improve yourself and your business, but it’s very important not to disagree in front of others.
You’ll doubtlessly argue about some things but keep it private so as not to create a toxic working atmosphere.
Sharing the ups and downs of business
On a personal level, there are great positives to sharing in a business with a friend. When you achieve success, what better to person to share in that success with than a friend?
Equally, who better to pick you up from disappointment or during a worrying time than a friend? When the partnership clicks, there is nobody you would rather have by your side.
I am currently in business with friends for the second time and know just how effective it can be. Joint Co-founder of Christopher Ward, Peter Ellis and I worked together at the Early Learning Centre very successfully, before selling the brand in 2004.
Our next step was to go into business with another friend, Chris Ward, to found Christopher Ward watches.
Making a success of being in business with friends
The secret to our success is that we all bring different skills to the business that complement each other.
Peter takes care of the financial side of the business, a role he also fulfilled when we worked together at the Early Learning Centre, Chris heads up sales and I concentrate on strategy and marketing, and it all works very well.
Having a management team who know each other well, are pulling in the same direction and are all firm friends has served us extremely well in the last decade.
It just goes to show that if you approach going into business with your friends with transparency and share in common goals, your brand will benefit.
This article has been written exclusively for ByteStart by Mike France. One of the leading retailers of his generation, Mike France was CEO/co-owner of the world renowned educational toy brand, Early Learning Centre. He is now the co-founder of Christopher Ward the world’s first pure-play online luxury watch brand.