Can I Start a Business with my best Friend?
Some years back while I was still a university undergraduate I started a laundry business with my best friend then. It was during the long semester break. We did the business from the comfort of my father’s compound.
The water used was pumped with my generator; the electricity for ironing was generated using my generator too. As is common, electricity supply in Nigeria is erratic. Also, I did a bigger chunk of the laundry work.
This I did not frown at. I was, after all, an “apprentice” undergoing training so to speak. My friend had run a laundry business in the past. After a month of running the business together, my friend told me he received a call from his family in another city informing him his father is sick and requesting he comes back home.
He asked me to oblige him all the money generated from our business so he could make the “urgent” trip, promising to refund me my own share of the proceeds upon his return. I didn’t blink twice. I agreed to help. After all we were “best friends.”
He travelled with the proceeds. Two weeks later he returned. A week later he was yet to refund. Days crept into weeks and weeks into months yet he kept on refining his excuses on why he hasn’t been able to make the refund as agreed.
Here’s the painful truth: the business died a natural death when he kept on giving series of unconvincing excuses and sentimental pleas for more time to repay. It became evident to me he wasn’t willing to refund due to the familiarity factor.
More than seven years down the line and I haven’t received a dime from him till date. What happened to our friendship? Your guess may be correct—the friendship, itself, died.
The above true life story may have been careened to the edge of a negative answer on our topic, should I start a business with my best friend? Perhaps, you may be of the view that starting a business with your best friend is the best thing to do judging from your own experience.
Fine! Presto… This piece doesn’t take any categorical or firm viewpoint. I shall present two different answers to the question and allow you use your discretion in coming to a decision suitable for the context you find yourself.
So when it comes to digging deep into the topic at hand, here’s how experience, observation and personal opinion has informed my answer:
1.) It Depends on You
Yes, you read correctly. It depends on how you see it against the backdrop of how you’ve fared with that friend in times past on money-related issues. You should be able to read the signs clearly from your friend’s attitude and general behavioural pattern.
A best friend whom you gave some money in times past to keep for keepsake so you could use it for a future purpose—who goes ahead to spend it, isn’t a friend you should start a business with.
Inversely, a friend who has been faithful with money is one you can start a business with. However, you must tread cautiously.
2.) Knowledge of your Best Friend
This factor can be seen as a good reason to do business with your best friend. Again, it can be a reason that will inform you on the need to desist from that business in the first place.
The fact you’ve known your best friend for years is a good reason you do business with him. Trust can be maintained in scenarios like this. It is possible both of you share same beliefs.
Where this is the case on most issues, it will be easy taking decisions together and this will reduce the frequency of friction. Your communication with your friend will also be an easy one due to the nature of your friendship—that of best friends.
It obliterates the need for unnecessary compliance with formalities and bureaucratic tendencies that may hamper speedy business growth.
Yet you mustn’t overlook the dynamics of human behaviour. Psychologists have been telling us about the changing nature of humans. A lot of factors can be attributed to this: personality, environment and so on.
It is therefore possible for someone whom you call your best friend (who you think you know very well) to change; and sometimes for the worse.
3.) Analysing for Hints of Mutual Respect
Some persons can be so bossy. Some are used to nagging, authoritative and over demanding attitudes. If this is who you friend is, or perhaps you as well, I advise your steer clear from partnership.
However, if both of you know yourselves very well to the point of tolerating each other’s excesses cutting across many areas of life such as family, money related matter, your other friends, and religious beliefs, and you are optimistic that starting a business with your friend is just about the right thing to do, why not go ahead?
In scenario like this, it is pretty easy forging synergy on corporate visions, goals, strategy, and so on. Mutual understanding is the underlying factor here.
4.) Some Critical Questions you alone must Answer
a. Do we have same values?
b. Can our different skills blend seamlessly in running the business?
c. Am I a workaholic and my friend a lousy fellow?
d. Are we married or single? What’s our marital status?
e. Can we handle each other’s criticism of the other?
And so many other questions which you can formulate. It is significant you answer these questions objectively. Do not let emotion sway you. Sentiment has just a little space in business. Disregard this at your own peril.
In answering the questions above, understand that trust is one critical factor in business. Sometimes trust can be betrayed; other times you have its inverse. In my own case as illustrated in the first paragraph of this piece, it was the former.
This doesn’t in any way suggest that the right answer to the poser (“Should I Start a Business with my Best Friend?”) is a categorical “No.” Your answer should be dependent on a host of factors and thinking along these: What’s the nature of the business? What shared past do you have with that friend which is sufficient reason for you to trust him or her in business?
As a parting word of advice for friends who are thinking of starting business together, first, do not be hasty in concluding or agreeing to a partnership. Know the terms of the business. Know what it means for both of you to partner in the business.
Know your roles, contributions, liabilities, equities, and stakes and so on. For instance, you own a telecom firm with your best friend—who acts as CEO and who plays administrative/supervisory roles on the day to day running of the business?
Document these things. Do not work with assumptions. Never assume “Oh, we’ve been friends for long and will understand ourselves.” Nothing can be farther from the truth than this faulty assumption.
When it comes to the finance of your business, be clear with your best friend on the fiscal policies both of you intend adopting. Do we open joint accounts? Perhaps, we could toe the traditional way and stack cash in office cabinets, and at the end of the day, or week or month we share the proceeds subject to the agreed percentage on sharing formula?
Whatever the agreements reached, do not downplay accurate and thorough bookkeeping practice.