5 Things to Know Before Starting a Business With Friends

5 Things to Know Before Starting a Business With Friends

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Starting a business with your friends is incredibly rewarding, but it comes with its own challenges.

You want co-founders who can push you, who can make you nervous – the kind of people whose intelligence and motivation make you feel like you have to operate beyond your limits just to avoid catching up . You also want them to know something you don’t know. Good co-founders will have skills and expertise beyond what you know, which makes you a great team.

If you’re already friends with people like that, consider yourself lucky, but don’t think everything will be easy. Here are five lessons I learned while starting a business with my own friends that should help you avoid some of the more obvious pitfalls:

1. Stay in your lane.

Define your roles and do it early. When dealing with friends, taking a more collaborative approach to everything seems natural. This can work to some extent, but it is best when all members of the founding team can “own” a different part of the business. Doing this right means understanding the strengths and weaknesses of the whole team, including yourself, and using that knowledge to clearly define each person’s individual responsibilities. Once you’ve done that, feel free to apply it. It’s good to tell someone to get out of work and focus on their own.

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2. Have tough conversations early.

There can only be one CEO, one product manager, one sales manager, etc. Again, it is essential to know the strengths and weaknesses of your team. Plus, you can’t be afraid of having frank discussions about potentially sensitive topics like equity, salary, title and job descriptions. The more you delay them, the more difficult and uncomfortable they become.

3. Businesses are not democracies.

We are taught that children share and compromise with our friends, and we are also taught that democracy is the most just form of government. Flash info: a company is not a kindergarten class or a country, and equity is not a priority for founders at the start of their careers. “Benevolent dictator” is a much more precise job description for you; when starting up, there is no time to get everything through a committee, and frankly, some things just aren’t up for discussion. Take control and move the ball forward every day. It’s easy and safe to put every little thing to a vote, but ultimately it is a waste of time. You will be so mired in bureaucracy that your business will do nothing.

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4. New perspectives are crucial.

You probably have a lot in common with your friends. Similar backgrounds, personalities and life experiences often provide a solid foundation for friendships, but can be problematic from a business perspective. If you have a blind spot, chances are your good friends can share it, so make sure your first recruits are people who can give your business a dose of fresh ideas.

5. It is beneficial to include everyone.

When you start a business with friends, your social life becomes a catalyst for innovation. A significant part of your idea sessions will take place outside of the office, whether at the weekend, at dinner, or at a local water source. This is a real asset to you and your team, but you have to be careful not to exclude new team members who have not been in your long-standing circle – it’s just shooting yourself in the foot.

Here’s a sixth bonus lesson: Starting a business with your friends is worth it. Creating something from nothing and helping it grow is a fantastic experience, and it’s even better when you can do it alongside people you really love. It’s not always easy, and sometimes your strengths as friends can become your weaknesses as a business, but if you take this into consideration and plan wisely, you will be in a good position to succeed.

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This article was written by a member of the AlleyNYC contributor network. AlleyNYC is one of the largest innovation hubs in the world, helping to foster the growth of startups at its flagship site in New York. LikendisLike Media is a partner and investor in AlleyNYC. If you want to know more about AlleyNYC and how to apply for membership visit here.

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