Being an entrepreneur can be tough and frightening, especially if you have to do all of the things alone. This is why doing it with your best friend can be an exciting possibility because you know each other well enough and have mutual trust. However, do not be naïve in thinking that this road to entrepreneurship together will be easy and smooth. Being business partners can lead to broken relationships, especially if you do not put these tips in mind before registering yourselves as co-owners of your enterprise.
Talk About Finance and Be Clear
Even if you are best friends, you might not be fully aware of your possible partner’s financial status. It is not the easiest discussion to have, but you need to be open and frank with each other about money. First of all, you will both put in your money that might be at risk. In case of any emergency or other financial needs, you will not be easily able to pull this money out.
Worse, if the business needs more investment, you will either have to pitch in more or find someone to finance your enterprise. Lastly, understanding each other’s perspective and habits when it comes to money will lessen debates later on regarding handling the finances of the business.
Divide The Responsibilities Fairly
This is one of the aspects where having a business partner is great because you will not have to do all the work yourself. To be more efficient and successful, it is best to divide the responsibilities very early on.
First of all, discuss how much each of you will invest and what percentages each of you own. If one is investing more, then it makes sense when this person wants more of the management role. Otherwise, it is important to decide who will handle the many operating tasks or how this can be divided among the partners. Should there also be employees hired by the company, who will they report to?
Another thing to be clear about is the working schedule both of you will put in. Having common times will allow you both to discuss and decide on key business issues. These questions should be agreed upon early on to lessen gray areas and prevent misunderstandings and fights in the future.
Understanding each other’s skills and strengths will be a great guide when it comes to dividing the work. After all, you want to contribute to the business and at the same time, the person with the needed competencies to handle these tasks.
Have Everything In Writing
Documenting all agreements, division of work and other important decisions will make it easier for you to refer to something should a disagreement come up. Moreover, it will protect the business and the friendship as well.
Even an exit strategy should be decided upon and put into writing. This will make it clear who will get control of the business if one wants out, or how to divide everything when the business folds up. Small businesses will take years before they are sure to get a profit, and these things need to be clear to avoid disappointment.
At this stage, it might also be advisable to get a lawyer involved. Having a neutral person to advise both and draft agreements will be the best thing you and your best friend can do to ensure the success of your friendship, regardless of how the business ends up performing.