3 Questions You Need to Ask Before Going Into Business With a Friend

You’ve surely heard horror stories of great and successful companies crumpling simply because the founders were best friends who had a falling out somewhere down the line.

What’s worse, the statistics are there to back these stories up. A recent Hardwar Business School study examined two groups of tech founders – one consisted of friends, the other composed of strangers.Going Into Business With a Friend

The group composed of friends turned out to be more unstable of the two – with a founder turnover rate of 30%. on the other hand, the group made up of strangers did surprisingly well.

And when you consider that startup failure rates aren’t exactly great, you wonder why someone would even consider starting a company with a close friend.

Why Should You Consider Going Into business with a Friend

So wouldn’t it be safer to stay in comfort zone, enjoy the benefits of your day-job and preserve a close friendship? The answer is of course, yes; however, if you have a great idea and you gut feeling says you need your capable friend to succeed, you should simply ignore the negative statistics.

What’s more, history is full of stories of friends who managed to become successful business partners and create world-renowned brands. Just think of Ben and Jerry or Hewlett and Packard.

But before you go into business with your best friend, there are certain things you need to talk about. And while most people assume that just because you have a history with a person, it’s easy to have difficult conversations – it’s actually not.

Nevertheless, it’s definitely easy for grudges to develop at work, so before you start closely working with a dear friend, you need to summon you courage and ask a couple of difficult questions.

Three Questions You Definitely Need to Ask

Question #1: Is He In a Stabile Place in Life?

Business With a FriendFirst, you need to get this out of the way. You see, there’s a good reason why so many employers (more than 60%, according to the Society for Human Resource Management) check credit scores and histories of potential workers. While this may seem like a private matter, when you start a business, your own bottom line will become a public matter. So if your partner is in debt, you could easily end up in a situation where, instead of bouncing back from a bad investment, you’re forced to close up shop.

Question #2: What Will His Role Be?

Start a business with friendAccording to MassMutual’s FamilyPreneurship study, which examined more than 500 family-owned companies, the most successful ones usually make each person’s role in the organization clear upfront. This means that both yours and his positions in the company need to be clear from the get go, and it would be smart to find a shareholders agreement template online and fill it out as soon as possible.

Question #3: Can You Test Your Relationship?

Business with friendSo before you start anything, the best thing to do would be to ask your potential partner to do a test run before fully committing to your company. In fact, Melinda Emerson (the author of “Become Your Own Boss in Twelve Months”) says that you need to see how your partner will work on a project with you. This would answer a bunch of necessary questions (like “Is he a leader?” and “Can he follow your lead?”) before you commit your time, energy and money to a real projects.

Final Thoughts

So is it worth business and friends? Well, if you want to have a good relationship with your partner from the jump, it’s worth a shot.

Look at it like this – on average, workers spend anywhere between 8 and 9 hours every day at work. But a recent UK study has discovered that entrepreneurs spend more than 60% more time at work than others. Most of them actually spend anywhere between 52 and 62 hours per week.

So you’ll spend a lot of time at, which means that people you’re going to work with are going to be a big part of your life.

And a recent Gallup poll discovered that good work relationships can boost the quality of your work by 50%. But the biggest reason most people bring their friends into the fold is actually fairly simple – you can trust your friends. And when it comes to building a business – trust is more valuable than anything.