Should you start a business with friends or family?

I was asked recently about what I thought of friends who start a business together.  I don’t actually know a lot of friends that were in that situation. The few people that I do know have talked openly about the challenges of working with someone that they like and know personally. The idea of working with someone who you like, who’s work maybe you admire, sounds exciting. But there are risks.

Going into business for your-self is scary-who wouldn’t want to share the experience with a friend or family member that you like and trust. The reality is though that the dynamics of friendship or family change when you start to work together.

What if your work ethics aren’t the same?

What if you have different work styles that don’t compliment each other?

What if your views of the business are entirely different?

What happens when the partnership doesn’t work out? Is a friendship lost forever?

I know of two sets of friends and families that would say knowing what they know today, they would not have started a business together.

The good news is-they still like each other, but they recognize that being in business together has strained their relationship too.

My attorney who works with small businesses has told me repeatedly the issues she works on with partners that start a business together and don’t lock down their partnership legally. More often than not, over time  the partnership frays and one or both parties want out. That’s when it can get ugly if the formality of a legal structure wasn’t set up in the beginning.

Breaking up a business partnership can be like getting a divorce. People are vested in the relationship, both personally and professionally, and when it doesn’t work out, the breakup can be painful.

I started a conversation with a friend several months ago about working together in a few months after she finishes a leadership role that she committed to for a year. We have had some very good, candid conversations about our styles, expectations and what the relationship would look like.

She is very linear and methodical, I tend to dive in and figure it out. We have, over time, come to the conclusion that we are better as friends than as business partners. I’m okay with that and so is she. I’m grateful we didn’t rush to work together and may have jeopardized our friendship. I admire her as a professional and even more as a friend.

I am not advocating that you don’t start a business with friends or family-just go in with an open mind and evaluate the risks.

Some things to consider:

-Have a very frank conversation about roles and responsibilities of a new business.

-Talk openly about the financial commitment and financial risks.

-Figure out your titles, whether they are equal such as partners or hierarchical such as CEO, President, Vice President.

Lastly, make sure that you hire a good attorney that can help you navigate through the legal terms of a partnership.

To your success!