(YoungBiz.com) - What could be better than starting your own business and making money doing what you love? How about starting that business with your best friend?
Lots of 'treps decide to give it a go as a partnership rather than going solo, and for a host of different reasons, from combining resources and sharing the workload to just getting another opportunity to hang out together.
A business partnership between friends can be a successful venture, provided you lay the groundwork before you go to work. Before you decide if it's for you, check out these five tips from 'treps who have been there, done that:
Taylor first ventured into business with friend Michael Stahl. The pair met while competing together in Future Business Leaders of America's annual entrepreneurship competition, where they walked away with first place. They put their prize-winning skills to work, founding Careers4Teens.com--now renamed GoFerretGo.com--a job search site for teens.
Last year, Stahl and Taylor decided to branch out in different directions while continuing to support one another's business endeavors. Stahl now runs StreetSage.com, a maker of personal finance software for high school students, while Taylor has become a partner in iNtouch Technology Group. "Most of the people on my team are my friends," says Taylor. "At iNTouch, we are all good buds on and off the business field."
2. Get to know each other's strengths and weaknesses. "Do a skills' analysis and see how your skills complement each other--or if they don't," Taylor says. "It's best if the friend who's going to be your business partner has skills that complement yours."
Keep in mind, too, that a good business partnership doesn't always need to be made up of two equals. "I run iNTouch with one of my original mentors, John Vandewalle," Taylor said. "There are lots of advantages to going into business with a mentor. For one, you'll gain from his or her insight."
3. Go with the flow. In any relationship, there will be the little things--those habits or quirks that drive you crazy. In a partnership, though, it's important to assess whether it's an issue that directly affects the business--and therefore needs to be dealt with--or is just a part of working closely with someone. "When you work with others, you have to accept little things people do," says Decardos Maddox, 16, who joined T.K. Worm Factory in Springfield, Illinois, soon after his best friend, Travis Bruce, started the fertilizer business.
"You can't try to boss people around," agrees Bruce, also 16. "You have to keep a cool, calm attitude and pretty much just have fun with it."
Remember, too, that the different perspectives you both bring to the table can be strengths. "We would talk about a particular part of the site and decide who would do what," recalls Melissa Sconyers, leader of a three-person team that created the eBiz4Teens site, which helps teens start e-businesses, for the annual ThinkQuest Web site competition. "Then we would separate, come back with our finished work, and realize that everybody had a different interpretation of what we had discussed," explains the 18-year-old Austin, Texas, 'trep.
"We decided that, instead of splitting up, we would work as a team on everything. The result was an end product that we are very proud of."
4. But don't be afraid to speak your mind. When an issue comes up that directly affects your biz, don't play ostrich and stick your head in the sand. As distasteful as it can be to bring up a conflict, it's crucial to both your friendship and long-term business success.
That's a lesson Taylor learned from his experience as a partner in Careers4Teens.com. "I think you need to be assertive when it comes to how the business operates," he says. "Don't be afraid to express your opinion."
Compromise is one simple solution. "It's pretty simple," says Maddox. "If we find something wrong with one possible solution, then we'll use another. If both ideas work, we'll do it one way the first time and another way the second time to see which works best."
5. Set yourself up for success. David Liu, 16, Wei-Cheng Hsu, 17, and Wenche Gao, 18, want to keep their San Ramon Valley, California, Web site design company, Ink21 Design Studios, going while they're in college. Until they graduated from high school this spring, the three were able to meet daily to discuss the business. Now that they're headed in different directions, it won't be as easy to do that--which is where their partnership agreement comes in.
The partners believe their written agreement will help the company continue to run smoothly, in spite of any conflicts that may arise. "Our partnership agreement defines the organization of our company and how it will be run," Liu explains. "Because we want to continue this business, it was important to start with a solid foundation."
Choosing whether you want to take on a partner as part of your business, as well as who that partner should be, is one of the most important decisions you will make for your company. A partnership, like any business arrangement, has its advantages:
- Shared ideas, capital and resources may offer a stronger base for business success.
- Profit or loss may be divided however the partners choose.
- Partners declare their share of income on their own income tax returns.
And its disadvantages:
- Partners can have personality conflicts.
- All partners are responsible for debts of the company.
- All partners are responsible for any negligence.
- If sued, partners can lose their personal as well as business assets.
Although a written partnership agreement, like the one Liu, Hsu and Gao share, is not legally required, it's always wise to get things in writing. A good place to start is with the Small Business Administration. You can call the SBA Answer Desk at (800) 827-5722, or visit the SBA Web site, where you'll find helpful tips on starting a business as well as links to your state's Web site. Go to it!