Starting a business with friends: can it work?
4 min read
Yes, it can work very well. You trust each other, you know each other's strengths and there is little to explain. But friendship is not an agreement. If you start a company together, handle business matters like business, precisely to protect the friendship.
Two hats
As a friend
- You wish each other everything.
- A fight is over with a sorry.
- You would rather not talk about money.
- You say yes, even when in doubt.
As a partner
- You agree who does what.
- You put agreements in writing.
- You discuss money every month.
- You say so when something is not working.
Why it works
- Trust. You know who you are dealing with. That saves time and doubt.
- Honesty. You can say what you think without beating around the bush.
- Perseverance. In a hard period it helps to stand next to someone you really know.
Where it tends to chafe
In practice it usually comes down to the same points:
- One works far more hours than the other.
- Nobody knows exactly who decides what.
- Money is not discussed until it suddenly becomes a problem.
- Ambitions drift apart: one wants to grow, the other wants calm.
- Criticism feels personal, so you keep it to yourself.
Six agreements that make the difference
1. Talk about the end at the start
What happens if one of you wants to stop? Who keeps the company, and at what price? It feels awkward to discuss this on day one. It is far more awkward on day one thousand.
2. Divide the roles
Agree who has final responsibility for what. For example: one handles product and technology, the other sales and marketing. Then you also know who makes the call.
3. Link the stake to the effort
Fifty-fifty sounds fair, but it only is if the effort is equal too.
Example: fifty-fifty, but not the same effort
You can agree that someone's shares only fully become theirs after a few years, as long as they keep building. This is called vesting. If someone stops earlier, they keep only the part already built up.
Example: a stake you build up over four years
4. Make money a normal topic
Who takes money out of the company, and when? Does profit go to you, or back into the business? Who puts money in when it is needed? Write it down.
5. Schedule fixed business meetings
A fixed meeting, for example every week, with the numbers on the table. Then business does not have to be discussed over dinner, and friendship stays friendship.
6. Speak up early
A small irritation is easy to discuss. A bottled-up one is not. Agree that you both say so when something is not working, and that this is allowed.
Put it in writing
Record your agreements: in the Netherlands, in the partnership agreement for a vof, or in the articles of association and a shareholders' agreement for a bv. A notary or lawyer can help. It costs something, but far less than a dispute without agreements.
In short: starting a business with friends works when you trust each other as friends and make agreements as partners.