Want to start a business with someone you know?
Here are 3 reasons why you shouldn’t.
I fell prey to the idea that starting a business with someone I’m close to would be fun! It would be an adventure! And if it failed, we would have a nice laugh after all of it and our relationship would be stronger for it.
That did not happen. Our business failed, and so did our relationship.
Starting a business is often compared to running a marathon. It is and it isn’t. Yes, you need to have the long game in mind and most of the time you are working your ass off and not seeing any results. The journey is the prize, not the physical medal at the end, or the ability to work your dream job after a few years.
Sure, you and your bestie or your family member can train together, compete together, and celebrate together for a marathon. And similarity, your bestie or your family member can plan together, produce together, and be successful together… but that is where the comparison stops. The financial burden and financial risk make starting a business a completely different game.
Financial risk changes people in unpredictable ways. You might think you know everything about someone, but just like moving in with them, you learn real fast why you were wrong. The stress of making daily decisions that will impact the future of your business, your success, and your money make people unrecognizable. Sure, sometimes you find out that your partner is way better at stress than you could have ever imagined, but usually, that just isn’t the case.
Starting a business with someone else is marrying that individual, essentially. For better or worse, and in sickness and in health. The ups and the downs of business, when you are in the red and in the black. You are by each other’s side, and you are supporting each other no matter what. And if it doesn’t work out? Divorce can end in financial ruin, and so can a business.
Have I not scared you off? Are you even MORE empowered by someone telling you it’s not a good idea? Okay. Then here are some things to think about before you invest a single penny.
1. The word “no”.
Can you say no to this person? Really, take a second and think about this. If they text or call you, do you drop everything and run to what they need? Do you go with every decision they make? Do you often let them decide things and you take a back seat? Are you often the one that avoids confrontation because you think it is just not worth the fight? This isn’t necessarily a bad thing for friendship (definitely could be a red flag….) but it could be terrible for business.
Let’s say your potential partner wants to go to a different restaurant as you. You don’t particularly like the restaurant but it’s not going to kill you so you say yes and you go have a good night.
Now let’s say your potential partner wants to design your logo. You know they don’t have any graphic design experience, but what the hell, this is supposed to be fun! A week later they come back with the logo and it is completely off base what you had discussed. If you can’t say no, think about the repercussions. You are going to have signs, labels, t-shirts, advertisements, etc. with that design, forever. If you don’t love it, are you going to be able to promote that design in every single outlet possible? Are you going to be able to support it and get excited every time you see it?
This is only one small example, but it has the potential of making your business unsuccessful and end in bickering.
Can this potential partner say no to you?
Can they say no to anyone? If they are the type of person who is a “yes” person, or a people pleaser (and this goes for you too) then you might find yourself in some not so great collaborations with some not so ideal individuals.
Let me elaborate.
My business partner and I knew we needed to have a website. My business partner had some experience and I had very minimal. We thought it would be worth it to contract out designing a website so we could focus on our product and other aspects of getting a business up and running.
Note: the realization that we did not need as professional of a website as we thought at this stage of our business is a whole other article on its own.
So my partner knew of someone who could do this. He was a local, small business owner himself. Sounded great! Later I found out that we were his first client and was an old colleague of my partner. He had probably propositioned her to be a client without me knowing.
Anyway, long story short. We ended up paying an extraordinary amount of money for a website that barely worked well. But every time we got angry about something not working, my partner would take it on herself to speak to him because they had a long professional relationship.
BUT. My partner can’t say no to people. She is a people pleaser. So when she thought she was chewing him out, and getting him in line, she was actually complimenting his skills and getting us further into debt because she refused to drop his monthly retainer rate.
So moral of this story? Don’t be partners with a people pleaser. You will lose, every time. And if you yourself are a people pleaser, maybe being a business owner is not for you.
2. Your relationship
How do you know this person? Are they a friend? Are you married to them? Are they a family member? What will happen if you fail? What will happen if you are successful?
Unfortunately, you need to plan for the worst-case scenario. This is the one area that a business is not like a marriage (unless you are a celebrity and get married with a prenuptial). When you get married you aren’t necessarily thinking about the divorce, but with a business, you need to know when to walk away, how to walk away, and what you are going to do if it just falls flat.
Let’s say your business fails because you both couldn’t agree on anything. Notice I said your business failed… not necessarily your friendship failed. But the line between business and relationship gets so blurred that it will likely be almost impossible for you two to differentiate the two. Not only will you personally be hurt, but your bank account will too, and that could leave some seriously deep scars.
My partner was my mom. A lot of people told us we were super cute because we were the quintessential mother-daughter duo. Even more, people would tell me how envious they were of our relationship.
Do you know how many family-owned and -run businesses fail? According to the Harvard Business Review, 70% of family-run businesses don’t make it past the third generation because of family fighting.
I had a very rocky relationship with my mom (why we even started a business, to begin with, is a story for another time). I didn’t know how to talk about money with my mom. In my family talking about money is taboo. I could never ask her how much she paid for something, how much she made at a specific job, or especially ask if she needed money.
So why did I believe that we could beat the odds? Why did I think we could just get it together?
Because money changes people. When you think you have a good idea for a business you think you can’t fail. It doesn’t matter who you are paired with. You believe your idea is too great to fail. Too big to not be a complete success.
When you have these grandiose ideas, you don’t think about the impact of your decisions on your partner. When your eyes are on the prize, sometimes your actions, and theirs, aren’t understood outright which can lead to microaggressions that add up over time.
If you aren’t careful, and you don’t know how to have these serious conversations with your family member (in my case) or with your best friend or spouse, then things are bound to fail. Sure you might know how to have a talk with your spouse about when he/she/they hurt your feelings, but do you know how to have financial conversations with your mom or dad?
Difficult discussions are …. difficult. But they are even more so when it is with someone you have a personal relationship with. Many of the leadership courses I have gone too have devoted at least one session to this topic. However, it is usually based on having these talks with someone you don’t actually know very well. They instruct you to look at them as a person, and not as a business person.
But when you start a business with someone you only see as a person, and not as a business person, will you be able to cross the divide? Will you be able to separate the business from the relationship? It is much harder said than done.
3. Do you trust them?
Odds are you think you do. I mean you are going to start a business with them, why wouldn’t you trust them? Would you really start something with someone you know will just stab you in the back in a few months?
Yeah you might trust this person with some deep dark secret, or you might trust them with being able to pick out what coffee drink you like, but do you trust them with your money?
Would you be able to share a business credit card with them with no sweat? You know for sure they wouldn’t make rash decisions on your behalf? They wouldn’t pay themselves first without discussing it?
Like I’ve been saying. Money changes people. If you can trust your money with this person, then maybe you can get over the other hurdles. If you can trust that the decisions they make are for the better of both of you, then yes maybe it will work out.
Maybe.
So, in the end, there are three things that you need to think about before you jump into a business partnership: is the “word” no a taboo word; the strength of the relationship you already have, and the amount of trust you both have between the two of you.
Now you may be the exception and have a terrible relationship but go on to making an amazing business. Great! But you are not the rule.
Starting a business with someone is not an afterthought or a drunk vision coming true. Hollywood might make it look like that. But that just isn’t the case. Unless you have loads of money that you just don’t know what to do with, you need to be serious about how or if you choose a partner for your business.
