Going Into Business With a Friend? Read These Tips First

If you have a friend who wants to pursue the same career as you, it’s easy to wonder if you might be able to do even better working together. Although many partnerships lead to a satisfying business relationship for decades, there are a few things you should know before you get started.

Take a Trial

The best way to learn how you and a friend will work together in your chosen industry is to try doing it on a small scale. Start with a short project that will take a few days or a week to complete. You don’t even have to go through the entire process, if your work requires complicated paperwork and permit applications. You might just go through a few mock project planning sessions. This allows you to get a sense for how you and your friend will really work together, before you start adding in the complication of client interactions, payment and work schedules.

Identify Each Other’s Strengths

Some partnerships start out very easy to delineate the roles of each person, but this is not always the case. If you are licensed for one job and your friend is licensed for another, it will make it quite obvious who should be doing what. Even in that scenario, you will still need to determine who will be responsible for marketing the company, interacting with customers, hiring subcontractors and collecting payment. Have a frank but fairly informal discussion of each other’s relative strengths, so that you can decide who should be in charge of which tasks. Once you formalize your plans, be sure to put all of these details in writing. This will help to reduce duplication and argument once you start your business.

Consider Different Forms of Incorporation

One of the first agreements you will need to reach with your friend is how you want to start your business. You should know that there are many options to choose from. It depends on how involved each of you will be with the business, and the kind of liability you are willing to shoulder. Common partnerships include:

• General Partnership, where each partner retains some control and liability for the business
• Limited Partnership, which may also have partners or investors with limited control or liability
• Limited Liability Partnership, where each partner has limited liability
• Joint Venture, which may be a partnership of individual businesses
• C-corporation, to protect against liability and the loss of an owner

Whichever choice you make, the CSLS corporation setup service can help you process some of the paperwork needed to establish your business.

Pick Your Battles

Even if you have been good friends for many years, there will be times when you disagree on certain steps you want or need to take for the business. Learn from these experiences, and make choices about when you should concede the point or stand your ground. It is not necessary to always win the argument, and this stance could become exhausting very quickly. If you can keep collaboration productive, but also respect each other’s spaces within the business, you can better avoid conflict.

Keep Some Functions Neutral

As you start to plan out your business, you may notice certain points that could turn into trouble if you don’t tread carefully. You might designate your friend to be in charge of marketing, only to get irritated when they spend more than you think is necessary. If you take charge of the company finances, your friend might bristle at having to ask you about a paycheck. You don’t want these common issues to become a sticking point that hinders your growth. It might be best to hire a third party to handle aspects of the business that you believe could be contentious. This way, you can focus on the good work both of you bring to the table.

One way to ensure that your business always has someone to help you brainstorm and get through the long projects is to create a partnership. With these tips, you can avoid some of the stress common to starting a contracting business with a friend. To learn more about how your own business could become an amazing career, contact CSLS today!