Many partnerships in friendship are cemented with a handshake. However, this can be a disaster, if you fail to understand the potential problem areas in the partnership. If you are planning to start a business venture with a friend, make sure this partner is as serious as you are – because, once the deal is finalized, there is a lot more at stake than just the business.
Many such partnerships usually start with a lot of enthusiasm and high expectations. Many, later turn into resentment, lawsuits and bankruptcy – basically a valued relationship wounded beyond repair. To ensure that your venture does not meet this kind of hiccup or end, probe deeper by asking each other some pivotal questions to help you get off the fence and move straight ahead with your plans.
1. Do you share the same business goals and values?
It is important to form a partnership agreement with a person whose business goals and values mesh with your own. Partners don't have to spend the same amount of time in business, but it is important that they are on the same page as you – they have the same values and objectives as you, as well as share a similar expectation from the venture – even when things start to sink. Fundamental differences not only lead to conflicts in the future, but will create a wedge between friends – something that can be completely avoided. This will likely lead to the death of the partnership.
2. Does your partner possess the right knowledge and skills?
To run any kind of business, you need a wealth of knowledge. Hence check if you both have the right combination of knowledge and skill-sets to meet your business objectives. This criterion will not only help you build your brand and business in the future, but will also give you the opportunity to grow and learn from one another’s perspective.
3. Do your work habits align?
Be sure that you both have common work habits – like hours that align – so you can work together on your business; especially while it’s getting started. If you both are working remotely, make sure you’ll have the flexibility to regularly connect with each other. A partnership with friends can start off with excitement, but later the day-to-day scheduling (as per mutual convenience) can drive you nuts. So, make sure your work habits are well-aligned, else you may not be able to grow the business at the speed it needs to.
4. What’s your default strategy for resolving conflicts?
If you argue a lot as friends, chances are, that tendency will carry over into your business. Be sure you and your partner can work together to resolve conflicts as they arise—because there will be plenty more over the years to come. If you want the partnership to survive in the long-term, you need to focus on what is best for the business. It would be counter-productive to spend time blaming each other for mistakes or errors.
5. Which specific roles and responsibilities should each business partner assume?
The most important step of forming a successful partnership is to establish the division of roles and responsibilities. So, check with your partner for what roles and responsibilities each one of you should handle. If you and your partner want to do the same task — it will create clashes. For example, if you have strong communication skills, you can choose client-servicing as your prime role. Or if your partner is good at marketing, he/she can take over jobs like social media marketing, blogging, email marketing, etc. A clever allocation of job responsibilities will not only lead to smooth functioning, but will also avoid conflict and potential issues later.
6. How stable are your personal lives?
Understand your partner’s personal life status before getting into a venture together. Check if the person is financially stable or if he/she is facing serious challenges in his/her personal life. Someone in the middle of a financial or personal crisis may not be the best choice to go into business – for a variety of reasons. Business plans are usually structured around mutual dependency, so stability is an important factor to consider.
7. Do you both trust and respect each other?
The secret to any business partnership agreement is rooted in trust and respect for each other. You both must be able to trust the decision-making, temperament, vision and competence of each other. A partnership that is based on trust and respect will guarantee that the partners will support and guide each other should anything go wrong.
Just as you seek trustworthy partners for marriage, you should look for good partners who will help you start and grow your business. The characteristics of a partner can drastically affect how the business will run. So, scrutinize your prospective partners in advance and develop a comprehensive written partnership agreement. Part of your planning agreement should also include exit strategies from the partnership if at all any of the above problems come in the way of your business success. At the end of the day, make sure you are starting a business with your friend because it would truly benefit you both; not just because you think it will be fun spending a lot of time together.