Good idea to start up business with friends?

**Daniel J. Bertelsen** · 12-17-2008 12:29 PM

Hi out there,

Here comes a question that many people might have a very ambivalent relationship to, which is why I am asking, since I want to hear peoples experiences, advices and/or warnings.

- Starting up a business with a friend (or more), is it a good idea?

I have personally never started up a business with a friend, my thoughts and ambitions have always lead me to go solo. However, sometimes I miss social activity and input from other equal minded "business-friends".

**RLorenzen** · 12-17-2008 12:37 PM

Don't do business with friends. You'll regret it in the end.

**Skipper** · 12-17-2008 01:59 PM

I've seen lifelong friendships ruined by going into business together. The kind of friendships where the family's vacation together, spend the holidays together and more. Just destroyed for good. Highly suggest not to go into business with friends.

**maleko** · 12-17-2008 03:21 PM

My family once started a restaurant business together and they had major arguments about money. Has that stop me from looking to start up a business with friends. No because I'm open minded. I'd give it a try. Ideally, you should start one without a huge investment.

**Daniel J. Bertelsen** · 12-17-2008 03:32 PM

Thank you so much for your replies so far, I highly appreciate them.

However, what I forgot to mention is, that these friends have direct relevance to the project that I have in mind and am thinking to present to them. The project is not an international corporation of any kind or anything in that scale. Its "simply" a website, nothing bigger.

The people I am thinking about asking all remind me of myself and have in one way or another possible relevance to the project. One of them is studying graphic designs and has the entrepreneurial drive just like myself - The well known phrase "I really want to start my own business soon. If not NOW! I just need the idea".

The other friend of mine has finished business college and are not really tempted to carry on with any further studies as of now. He is more motivated trying to give his entrepreneurial dreams a shot, just waiting for the right opportunity to appear (which I think might be this one I have in mind).

The third guy is very much in to internet and websites, and want to pursue a bachelor degree in business and computer science, so he definitely makes a qualified candidate as well.

So, in one way or another, the candidates that I have in mind for the project are qualified in one way or another, both financially and passion-wise.

**jlyda** · 12-17-2008 04:01 PM

Hi Daniel,
It sounds like you are currently thinking this through. Three things come to my mind quickly. All of them are contingent on the former.

1. Don't make rash, quick decisions. Set a date at least 7 days out (14+ would be best) and then commit to really digging in to find the answers you are seeking. New questions will arise. Continue processing your thoughts on these potential candidates. Ask other people who know them about their character, dependability, humility, etc. Do this discreetly. Be sure to ask the questions that are most important and will affect you & business directly. If you decide it's a go with one or all of them then move on to question 2.

2. Make the ask and be prepared to make an offer. Don't just go in with no strategy for your own interests in the business. It's important, even with friends to be very direct. If you are talking percentages then offer a percentage. Don't be greedy, but be fair.

3. If they accept and want to move forward. Immediately draw up an exit strategy for all involved. It doesn't have to be fancy, but does need to be in writing. It should include expectations, duties, shares, etc. A copy should be given to all involved and signed by all involved. This is the surest way to be sure your friendships survive if the business doesn't. Often, people don't live up to their word and the surest way to confront them is with their own signature. Lack of an exit plan is the biggest reason that friendships within business don't survive.

Hope this helps.
Jared Lyda
fireandmotionblog.com

**chrispalko** · 12-17-2008 08:15 PM

Originally Posted by Daniel J. Bertelsen

- Starting up a business with a friend (or more), is it a good idea?

No. It is not.

**marcstep411** · 12-17-2008 09:37 PM

If you know them and their good and bad sides, and know they can really contribute something, it's OK. In fact it's better than starting a business with stranger.

BUT you must clearly lay out the ground rules before you formally enter into a relationship -- who does what, how do you split the ownership, what happens to a persons ownership share if they leave in one month, one year, three years? Similarly, what happens if they can no longer contribute because of illness or even death. These are tough discussion to have, but you must have them. Then if you do have a parting of ways, the terms of the parting are known upfront and you are less likely to destroy a relationship, although bitterness can prevail no matter what.

**kinson** · 12-17-2008 10:12 PM

Well it depends on how thing come to be. If you're really friends and differentiate a business from friendship everything just might come to work well. Now if on the other hand you mix things well that's when problems start to occur. Just stay focused and pick wisely your business friends.

**Brainy** · 12-18-2008 12:07 AM

Originally Posted by Daniel J. Bertelsen

Hi out there,

Here comes a question that many people might have a very ambivalent relationship to, which is why I am asking, since I want to hear peoples experiences, advices and/or warnings.

- Starting up a business with a friend (or more), is it a good idea?

I have personally never started up a business with a friend, my thoughts and ambitions have always lead me to go solo. However, sometimes I miss social activity and input from other equal minded "business-friends".

Business Partners should be savvy, period...

Brainy

**Gopal Dev** · 12-18-2008 12:25 AM

Starting a business with friends is a double-edged sword. On the one hand it is great because you will be working with people you get along well with and trust, but on the other, if things go bad with the business it may affect your friendship or vice versa. It really takes a lot of maturity, communication, and focus to mix business with personal relations/feelings. Also, make sure everyone is on the same page and has the same goals before starting anything you may all later regret. Document everything and have contracts whenever necessary so everyone is accountable when money (and other big issues) are involved. What may seem rosy today could be hell tomorrow so it is always wise to be proactive and prepared for the worst, while striving together for the absolute best. This should actually act as a strong deterrant for anyone to engage in improper conduct, thereby strengthening your business and giving you peace of mind on the personal/friendship front. Hope everyone makes it work!

Gopal (The Musical Mad Scientist and Entrepreneur)
The v-Fusion Group