If you have entrepreneurial spirit, chances are your close friends do too. Have an idea that you think will take off? Starting a business together can be an adventure, to say the least. Make sure you keep these questions in mind as you weigh the pros and cons of launching a joint venture.
1. How well do you communicate?
It’s no surprise that open communication is one of the central elements that holds any relationship, business or otherwise, together. But when you consider the major step of launching a venture with a friend, it might be easier than you think to take that rule for granted.
Knowing each other well doesn’t mean that you should communicate any less, especially about the difficult subjects. You’ll clear away confusion faster, make sure you’re aligned, and work through tough decisions as a cohesive team.
2. Do you have trust?
Friendship usually means trust. And when it comes to building a business, that should be especially important for both of you. Think about the times where your potential business partner delivered on promises, went the extra mile, and helped you achieve your goals. If you have any hesitations, don’t take them lightly – you’ll be working together on critical decisions.
3. Do you share a vision?
You might have brainstormed together, but have you discussed your visions for where the company’s going and how you’ll get there as a team? This is a key question to consider, and one that can be deceivingly simple to answer. Take time to talk your ideas through, from the abstract to the specific, so you can stay on the same page from the very start.
Once your visions align, start breaking them down into concrete goals. Define clear roles and set responsibilities. Do you have a plan for the business in five years, a year, or even six months? Without these milestones defined, you might find your business heading in different directions.
4. Do you have a business plan in place?
A business plan is a strategic document that maps where your business is heading over a certain time period. Once you’ve agreed on a few solid targets, go beyond the verbal “OK” and put your plan of action in writing.
Taking this step seriously can be one of the keys to success. Treat important business matters just like you would for any business partner and hold each other accountable to following the business plan.
5. Can you separate personal and business matters?
Just like creating a business bank account is a pivotal step for the financial growth of your company, setting a clear boundary between your personal and your professional relationship can help you stay afloat.
You might even find that you strengthen your friendship by distinguishing between the types of conversations you’re having, specifically when and where. If you have an office space, leave personal chats at the door. Create a company email address to be used exclusively for business. Schedule meetings with specific agendas so that you don’t get sidetracked.
Don’t forget to take time out of your busy days to catch up. You’ll probably find that the new responsibility changes your relationship, but it shouldn’t suddenly take priority over your personal connection. At the end of the day, your friendship should continue growing through thick and thin.
6. What are your unique skills?
While having a strong friendship is a valuable asset for any business partnership, it shouldn’t be the only driving force. Getting along well and enjoying each other’s company isn’t always indicative of a strong business partnership. Consider your partner’s skillset, qualifications, and experience objectively before taking the plunge.
Your individual strengths should complement each other so you can collaborate effectively as leaders. Rather than creating competition, take time to understand where each of you shines.
7. Will your roles overlap?
Once you’ve identified the areas where each of you specializes, consider how your individual skills will translate into your roles within the organization. Take steps to ensure that there’s as little overlap as possible—you’ll avoid conflicts and miscommunications when you each have a clear view of your designated responsibilities.
Good friends Mary and Lisa work together as Painting with a Twist studio owners to give back to their community in a fun, relaxing environment. Read their success story and learn more about how SmartBiz helped them achieve their dreams with an SBA loan.
For more of our tips and recommendations to help strengthen your business as it grows, visit the SmartBiz Small Business Blog. Looking for an Intelligent CFO to provide financial insights based on your unique business? Get started with SmartBiz Advisor today. Learn where you stand and how to strengthen your lending profile—free of charge.