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The Pros and Cons of Founding With Friends

October 14, 2021
By James Gussie

The benefits of founding with friends are numerous, but there are also some risks. Here’s what you should consider before deciding to start a business with your besties.

The advantages and disadvantages of friendship is a discussion on the pros and cons of founding with friends.

On the topic of establishing a company with a buddy, there are many different points of view. Some believe it’s a positive experience that helps build a stronger company. Others argue that you should never attempt it.

Starting a company with a buddy makes sense since it’s natural to turn to the individuals we’ve selected to be in our life because we like them and have similar interests when we’re starting out.

Getting into business with a buddy seems like a lot of fun, which is why so many people do it (in fact, an estimated 40 percent of new businesses have friends as founders). Then you hear about the horror stories—partnerships that fell apart, creating a schism that permanently ended the relationship and the company.

When you’re thinking of establishing a company with a friend, be careful. Developing a commercial partnership with friends, like most things in life, may be successful or unsuccessful depending on the individuals and circumstances involved.

Take a look at these advantages and drawbacks of starting with friends to see whether you and your buddy can “make it” as business partners.

Table of Contents

The pros

Honesty and trustworthiness

You can rely on your buddy to be helpful and honest since you already know and trust them, and vice versa. It’s often simpler to be open about issues when there’s already a level of trust. Because you already know each other so well, deciding who will take on specific tasks and how you can each utilize your own talents is much simpler.

A common goal

When starting a new business, it’s critical to be on the same page as your co-founders regarding the company’s goal. You’ve probably been dreaming about this idea together since you first met as friends, and you know where you want to take it.

You can’t fake passion, and convincing others to invest in your idea is difficult until they believe in you. When you discovered with a buddy, that was already taken care of.

Someone on whom you can rely

Entrepreneurship is not for the faint of heart, particularly in the start. Many individuals give up and return to the corporate sector because they don’t have a support structure to encourage them to keep going.

When you start a company with pals, you’ll always have someone to rely on when things go difficult. There will be good days and terrible days, and having the ability to encourage and rejoice with one another may make the difference between continuing and giving up.

Having more enjoyment at work

It’s wonderful to have your closest buddy around you all of the time. You may make jokes with your coworkers, create a more relaxed environment in the workplace, and just have more fun at work. Normally, coming to work may be a drag, but since your personality and that of your co-founders already match, the workweek can pass much more swiftly than usual.

The cons

Blind spots and vulnerabilities that go unnoticed

We all know our pals aren’t perfect, but it may be tough to see others’ faults or call them out on conduct that isn’t in the best interests of the company. No one wants to jeopardize their personal connections with friends, yet skirting around issues may lead to disaster.

Furthermore, many founding teams who started out as friends can’t recognize one other’s flaws since they share such flaws. In the process of starting a company, getting outside views is critical.

Conflicts of power

Of course, no one expects to be battling for control with their buddies when they start a company, yet it occurs all the time. Entrepreneurs wear many hats, but understanding which responsibilities each of you will take on is especially important when starting a company with friends. The other founders may get irritated and communication may break down if one individual begins to take control and behave as the manager.

The distinction between leadership and management is significant, because it may decide whether the founding team is based on inspiration or resentment.

Work and social life are becoming more entwined.

Working together may be a lot of fun, but it also has its drawbacks. It’s easy to lose sight of your relationship as a distinct thing when your socializing becomes more like work. Because you and your partner will be living and breathing the new company, your professional and personal lives may merge, and you’ll need to be able to take a step back and relax.

There’s also the issue of knowing more about each other than the majority of coworkers. It may be tough to separate the professional from the personal in this situation. Little idiosyncrasies that you may not mind in a friend might become grating as colleagues.

A possibly uncomfortable conclusion

Of course, the greatest disadvantage of starting a company with friends is the possibility of a nasty “breakup.” Resentment may grow if you start fighting on a regular basis, disagree on the business’s direction, or if one partner picks up the burden for the other.

These tensions may sometimes build up to the point where the business—and the friendship—is jeopardized. It’s always a risk to establish a company with friends since you’re taking on the dangers of beginning a business while also risking losing a close friend.

Take it slowly and carefully.

When it comes to starting a business with friends, the risks are enormous, and you should proceed with caution. It’s been compared to choosing to marry someone by others. Early preparation may help you avoid difficulties later on and help you establish a solid partnership with your buddy.

Determine which kinds of financing you’ll pursue (bootstrapping, peer-to-peer lending, crowdfunding, and small business loans all have advantages and disadvantages), what each of your responsibilities will be, and how you’ll handle any communication issues that may arise. Then write it down and refer to it often.

There will be bumps in the road, and you’ll need to be prepared for them if you want your business—and your friendship—to survive.

The what are it’s advantages and disadvantages is a question that I’m not sure how to answer. It seems like there will be more pros than cons, but I don’t know enough about the process.

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