Starting a business with friends can be a wonderful experience. Friends have known each other for years, are familiar with each other’s specific morals, can give each other honest and constructive feedback, and…. However, this coin has another side. As much as it is possible for such a business to succeed, it is also likely to fail and fail, and may pose serious challenges to business and friendship relationships. Want to know the cause of this problem? In the following, we will answer this question. Also, in more detail, we will tell you in what circumstances starting a business with friends is wise and right and in what circumstances it is not. Stay with us.
Benefits of starting a business with friends
Let’s start our review with a half-full glass. What are the benefits of starting a business with friends and how can it help your business grow and prosper?
There is no doubt that friendship, if it is sincere and sincere, will have different rewards for the parties to the friendship. In addition, it will increase the possibility of growth and development in work and personal life for both. This is true for old friends as well as those who have just become friends. The chances of success in a business started with such friends are high. We will talk about the reasons below.
1. Provide constructive and honest feedback among friends
Close friends can provide honest and constructive feedback that will ultimately lead to business growth; Because they know each other’s interests, goals, and perspectives, and they know to a large extent what is going on in the other person’s mind.
2. Establish better and deeper business relationships between friends
Two or more friends who start a business together have common goals and priorities. As a result, it becomes easier to form an effective working relationship between them than with strangers. In addition, if a disagreement arises between them, it is easier for them to resolve it and reach a conclusion; Because they know each other well, they know each other’s morals well and know what each reaction shows.
On the other hand, when you partner with strangers in starting a business, it takes a little time to fill the void left by the previous acquaintance and to form a good and fruitful business relationship.
3. Enjoying starting and running a friendly business
Achieving the goals will be doubly enjoyable when you see the results of your efforts with the people you love and have common concerns with each other. In this way, you work together more motivated.
4. Possibility of more friendly business sustainability in work uncertainties and bad financial conditions
A study by researchers at the University of London’s two business schools found that businesses run by friends were more likely to survive in bad conditions than other businesses; That is, if they lose money, do not achieve the short-term goals they set, and have similar problems, they will be more likely to hope for the future and keep trying.
As a result of their research, it was found that in friendly businesses, it is more common that in bad financial conditions, business managers, instead of stopping investing completely, compensate for the losses incurred by keeping it out of their own pockets and keep their business alive.
Disadvantages of starting a business with friends
At the beginning of the article, it was mentioned that as much as the success of a friendly business is as likely as the failure of a business. There is research and studies that confirm this claim.
For example, Noam Wasserman, a researcher and professor at Harvard Business School, surveyed 10,000 start-ups in the technology and life sciences fields. 40% of businesses were run by friends. His research shows that the activities of friends who run a business are more likely to be successful than those of ordinary people. He also found that for every board member who has a social connection with other members, managers are 30 percent more likely to leave in the middle of the business.
But what is the reason for this and what are the disadvantages of a business started by friends that make the activities likely to be fruitless? We will say further.
1. Business failure if friends’ goals are not shared
It is very important that all business members fully share their goals and visions. Contradiction of these goals and perspectives will seriously threaten the success of the business; For example, you may want to start a thriving business in the future when your friend just needs a little extra capital in the short term. The gap that arises creates serious problems and obstacles to the success of the business.
Be sure to talk to your friends about long-term goals and visions before starting a business, and make sure they are shared.
2. The heavier the penalty for the failure of friends’ business
According to some estimates, 50% of small businesses go bankrupt in the first 2 years of operation. For ordinary people who do not already know, this failure is only equivalent to financial loss and does not cause other problems for them. However, if friends suffer such a failure in business, they not only suffer financial loss, which is affected in some way by their friendship, which sometimes even the closest friends can not compensate. If one of the parties blames the other, there will be an argument that will take a long time.
The failure of a business started by friends affects both work and personal life and therefore has a heavier penalty.
3. Affected by friendly relations under the pressure of financial contracts
Older people used to say, if you want to keep friends and family, never lend them money! If we extend this old adage of truth to friendly businesses, we will find that financial contracts can have the same effect and affect friendly relations.
When two friends start a business together, they will share in the profits and losses under a financial contract. This means that one person’s negligence can cause harm to another. If that happened then we would all be in big trouble.
4. Difficulty in explicitly determining the duties of members
Communication in friends is completely natural and honest, and superiority over each other and the like in such relationships is meaningless. In the business world, however, the issue is a little different, and in any case, one person has to take on the task of directing things and managing the others.
Friends may have trouble choosing such a person explicitly, and as a result, their friendly relationship may be affected. Some friends stop doing this altogether and do not choose a manager. This may also have consequences, and the business will suffer in the long run due to lack of management.
Which friends are most likely to be successful in business?
So far, the benefits and disadvantages of starting a business with friends have been discussed. By reviewing these, you can lighten the situation for yourself and see how much success you will have if you do. Of course, there is another way to assess the situation. One of the advantages of starting a business with friends is the previous acquaintance that friends have of each other’s morals and character.
With the help of information you have about your friends, you can better predict the future of working with them. Some friends are great choices for running a business and some are not. How can these two be distinguished from each other and what are the characteristics of good and bad friends for cooperation? We will say further.
Good traits that make friends good choices for collaboration
If you know the following characteristics and traits in a friend, you can be almost sure that he will be a good partner:
- Work commitment: Starting a business is a very difficult challenge and not everyone can handle it. The friend you partner with in order to start a business should have a firm work commitment and should not be hesitant about it.
- honesty and royalty: Truthfulness is the most important thing you should ask the friend you want to work with. No matter how close and intimate friends are with each other, if there is no honesty and integrity, the future of the business will be seriously endangered.
- Stability: Another important feature that your friend should have. We have said before that start-ups are relatively likely to fail; Therefore, the friend you choose to work with should be such that he does not give in to hardships and overwhelming situations and continues to perform his duties with hope for the future.
Bad traits that make friends unsuitable choices for cooperation
Friends to whom you can attribute the following characteristics are not good choices for starting a business:
- Narcissism: The friend with whom you are going to start a business should be receptive to new experiences and teachings. The narcissist who thinks to himself that he has the answers to all the questions and does not need anything new to learn is not very useful for working in a newly established business.
- Excessive passion: Enthusiasm, without diligence and meticulous planning, will have catastrophic results. Of course, it is not bad if the friend you start a business with is interested in his work, but this interest only results if it is placed next to a realistic and logical look at the current situation.
- More words and less action: Having different ideas about business and talking about them is not a bad thing, but it is better to do something that has clear results. A friend who is just used to talking about the various ideas he has but never takes the time to implement them will probably not be a good choice for starting a business. Such a person will be a good salesman, but not a manager and leader.
in the end
Some people agree to start a business with friends and some people do not recommend doing so. Each has its own perspective and evidence. The wisest thing to do is to examine the views of the pros and cons and analyze their views to reach a definite conclusion. Therefore, in this article, you read about the advantages and disadvantages of starting a business with friends. If you have come up with something out of the ordinary, then they have to re-think their position.
Starting a business with friends will present you with many challenges, and if your business fails, it will not only affect your working life, but also your life and personal relationship. Before doing so, it is best to weigh all aspects of the matter and think carefully about everything.
what is your opinion? Do you agree with your friends about starting a business? What reasons do you have for agreeing or disagreeing? Have you had the experience of starting such a business? Were you satisfied with the result? In the “Post a Comment” section, you can tell us and your audience “how” about your experiences and opinions.
Other sources: forbes