5 Things to Know Before Starting a Business With Friends
Having your closest friends around when you start a business can be very rewarding.
By William Litvack •
Opinions expressed by Entrepreneur contributors are their own.
Starting a business with your friends is incredibly rewarding, but it comes with its own unique challenges.
You want co-founders who can push you, who can make you nervous -- the sort of people whose intelligence and drive make you feel as though you've got to operate beyond your limits just so you aren't playing catch-up. You also want them to know something you don't. The right co-founders will have skills and expertise beyond the scope of what you know, which is what makes you a formidable team.
If you're already friends with people like that, consider yourself lucky, but don't think everything will be easy moving forward. Here are five lessons I've learned from starting a business with my own friends that should help you avoid some of the more obvious pitfalls:
1. Stay in your lane.
Define your roles, and do it early. When dealing with friends, taking a more collaborative approach toward everything feels natural. That may work to a point, but it's better when everyone on the founding team can "own" a different portion of the business. Doing this right means understanding the strengths and weaknesses of the entire team, yourself included, and using that knowledge to clearly define everyone's individual responsibilities. Once you've done that, don't be shy about enforcing it. It's OK to tell someone to back off of your work and to focus on their own.
Related: Marathons & Mud Runs. Great Business, But Where's The Tech?
2. Have the tough conversations early.
There can only be one CEO, one head of product, one head of sales, and so on. Once again, knowing your team's strengths and weaknesses is key. What's more, you can't be afraid to have frank discussions about potentially touchy subjects like equity, salary, title, and job descriptions. The longer you put these off, the more challenging and uncomfortable they become.
3. Businesses are not democracies.
We're taught as children to share and make compromises with our friends, and we're also taught that democracy is the fairest form of government. News flash: a business isn't a kindergarten classroom or a country, and fairness isn't a priority for early-stage founders. "Benevolent dictator" is a much more accurate job description for you; when getting things off the ground, there isn't time to run everything through a committee, and, frankly, some things just aren't up for discussion. Take control and move the ball forward every single day. It's safe and easy to put every little thing to a vote, but ultimately that's a waste of time. You'll get so bogged down in bureaucracy that your company will not accomplish anything.
Related: Why Brand Activation at Events Is Terrible
4. New perspectives are crucial.
You probably have a lot in common with your friends. Similar backgrounds, personalities, and life experiences often make solid foundations for friendships, but can cause problems from a business standpoint. If you have a blind spot, chances are your good friends may share it, so make sure that your early hires are people who can give your business a shot of fresh ideas.
5. It pays to include everyone.
When starting a business with friends, your social life becomes a catalyst for innovation. A significant chunk of your idea sessions will end up taking place outside of the office, whether on the weekends, out at dinner, or at a local watering hole. This is a real asset to you and your team, but you need to be careful not to exclude newer team members who aren't part of your longstanding circle -- that's just shooting yourself in the foot.
Here's a sixth bonus lesson: Starting a business with your friends is worth it. Creating something from nothing and helping it grow is a fantastic experience, and it's even better when you can do it alongside people you genuinely like. It isn't always easy, and sometimes your strengths as friends can become your weaknesses as a business, but if you take that into consideration and plan intelligently you'll be in a great position to succeed.
Related: What Will Attending an Event Be Like In 2020?
This article was written by a member of the AlleyNYC contributor network. AlleyNYC is one of the world's largest innovation hubs, helping foster the growth of startups in its flagship location in New York City. Entrepreneur Media is a partner and investor in AlleyNYC. If you would like to learn more about AlleyNYC and how to apply for membership visit here.
