Many friends decide to start a business together, and then when things go wrong they lose both their investment and their friendship. That’s why it’s important to consider these factors before entering a business venture with your buds.
Draw emotional boundaries
When you work with friends, you need to establish a temporary emotional boundary by anticipating that you will clash—and not taking it personally. Your friendship should also not cloud your judgment or weaken your resolve to make a tough business decision.
Agree on the business plan
If you’re not on the same page, you’ll soon be arguing over marketing strategies, costs, and other business decisions. Talk about 1) How big do you want the business to be? Is it just a sideline, or do you foresee expanding? 2)
What market do you want to tap? And 3) What image do you want for your product? If you plan to reinvent the business model, are you both the type who can work together and think objectively?
Set clear roles
Determine the roles that each one will play. Assign or elect officers of the corporation and make sure all of you understand the scope of responsibility for each position.
Avoid problems like overlapping roles, or giving an unnecessary role. Consider: should she be a partner with actual say in business operations, an investor who just gets a cut of the projects, or hired per-project for a short-term aspect of the business?
To avoid conflict, set rules on reimbursements, lines of approval, salaries and compensation, and how you will dissolve the company resources if you decide to close down?
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