She’s been by your side since the fifth grade. She’s seen all of your break-ups, was your sorority sister, and was in your wedding party. He’s your best friend, your go-to guy, the Fred to your Barney, the Michael Jordan to your Scottie Pippin, the Laurel to your Hardy.
Yes, knowing someone that well can be great if you go into business together, as you know how each other think and what each of your passions are. But working with a best friend can also be fraught with trouble—not only for your bottom line, but also for your relationship. So what are some steps you can take to make sure you keep that friendship solid as you build that company together?
Put it writing
Ideally, before you put the OPEN sign in the store window or set up your web site, you will have spelled out the basics of your partnership in writing. Adam Torkildson, PR coordinator for Customer Hook, went into business with one of his best friends and still remains partners and, more importantly, friends three years later. He says getting the business details in writing before you even begin is key. “[Have] signed documents detailing your arrangement, payment structure, who owns what percentage of the company, and any other legal questions that [could] crop up over the course of doing business,” says Torkildson. He adds that having defined budgets for raises, infrastructure, bonuses, and savings as well as guidelines on whether or not to take capital funding is also essential. “Right now, we're being courted to receive funding, but my friend is very hesitant,” he says.“I'm all for it.” With these guidelines already in place, however, he points out that struggles and heated discussions have been kept to a minimum.
Bibby Gignilliat, Founder and CEO of Parties That Cook, went into business with two friends, and then ended up going it alone. She agrees that setting up everything at the start is the best course of action. “Outline priorities, objectives, values, and business roles up front,” Gignilliat says. “Hire an attorney to draft a partnership agreement—like a pre-nuptial agreement in marriage—and clearly spell out all exit scenarios in case it fails. Ideally, you and your partner should each have an attorney so that your interests are protected.” Tokildson adds, “These things aren't rocket science and are basically good business principles for anyone in business.”
Michael Laramee, co-founder of Meal Train, started his company with a friend and former college roommate. “I was the officiant at his wedding,” he notes, “[Having] shared that history has worked well for us. The benefits are that you have a foundation to work from.” Laramee suggests those thinking of going into business with friends break down who is best at what. “[Define] areas of expertise before you get started,” he says. By delegating from the get-go who is better at what, tapping into each other’s strengths, and not overlapping responsibilities, the decision-making and day-to-day operations become more productive.
Louis Rosas-Guyon, president of R-Squared Computing, who has been business partners with a good friend for 12 years, agrees, and suggests partnering with a friend who isn’t just like you. “Find your complement, someone whose strengths are your weaknesses and vice versa,” he says. “For example, my partner is a technical genius who doesn't particularly like to talk to people, whereas I am less of a tech genius, but I will talk to anyone.”
Don’t let you friendship get in the way of open communication
Having your best friend sitting next to you everyday can make for a much more enjoyable entrepreneurial experience, but you have to keep in mind why you are there together—to make money and grow the business. That means constant communication, even if it is a tough conversation. “Encourage open and honest conversation. With friends involved, communication tends to become dysfunctional quickly because of fear of upsetting your friend,” says Raj Shah, SEO manager for Quill.com, who has gone into business with many friends over the years.
Brandon Medenwald, the co-founder of Simply Made Apps, a start-up founded with his friends after a fun conversation one evening, concurs. “The biggest fear is that, as things change, co-founders start to drift apart silently,” he explains. “We stem this by constantly communicating our wishes, thoughts and ideas. If we see something becoming an issue, we sit down and address it immediately. Letting issues fester is an absolute killer.”
Don’t mistake work-time for friendship-time
When you start to work together, you may be surprised to discover new aspects of your old friend. “Most of your friends, even your closest, rarely get to work with you, so your business acumen and the way you conduct yourself might be a side they've never seen before,” says Shah, “You [both] have to be ready to be seen in a different light.” This is all the more reason to keep doing “normal” things you did before entering into business together.
Medenwald agrees. “We still meet up for beers, play golf, and everything we did prior to starting a company together. This has prevented the relationships from slipping into a ‘business only’ mode,” he explains. It is essential to maintain your non-business friendship to make sure that foundation on which you joined together in the first place grows stronger, along with your company.