Money Talks: The right way to launch a business with a friend

To make your new enterprise a success — and preserve your friendship — have these conversations about money and management from the get-go.

Starting a business with someone you already know and socialize with is common. Four out of 10 teams of business partners include at least one set of friends, according to one study, but that same research found that businesses led by those with a previous social relationship were less stable than ones launched by former professional colleagues or even teams of strangers. Starting a business with friends can go really well — or really badly, putting your friendship in jeopardy.

To keep your business and your relationship on track, follow these expert tips for business partners who are also friends.

Hash things out before you launch

To make sure the partnership is a good idea in the first place, ideally you and your business partner will have some hard conversations ahead of time. Sunny Sabbini, a business partnership coach, recommends asking yourself whether you’d choose to go into business with this person based on their skills, merits, character and work ethic, even if you weren’t already friends.

Make sure you’re both willing to freely discuss your concerns. If you have trouble talking about difficult issues pre-launch and go forward anyway, you “might end up with fraught days and sleepless nights,” she says. Before you jump in with both feet, Sabbini suggests trying a small pilot project first.

Define your roles and responsibilities up-front

You may be friends used to doing everything as equals. But that can lead to conflicts once you launch, as well as confusion for team members who don’t know who’s in charge of what. So another important conversation to have is what role each of you will assume. “If someone is the CTO, they own the technical decisions. If you’re CFO, you’re responsible for making sure you don’t run out of money,” says Sherry Walling, Ph.D., a clinical psychologist and the owner and chief psychologist of ZenFounder. “Everyone needs to know who is doing what.”

Say what hat you are wearing in every talk

“I tell people to be clear on the nature of the relationship in any given conversation,” says Walling. “Say out loud what the relationship is: ‘In this moment, I am your friend,’ or ‘In this moment, I am your business partner.’” You can help this along by using different channels for different contexts. “Maybe you text about the friend stuff and use Slack for everything related to business,” she says.

Set up a schedule for your conversations

Friends often communicate informally. That ad hoc approach doesn’t work when you’re running a business together. Matthew Jones, Psy.D., a licensed psychologist, cofounder coach and creator of Cofounder Clarity, advises scheduling short (15-to-30-minute) “cofounder syncs” as often as once a day and no less than once a week. “Those are focused on primarily updating each other on the business happenings of the day,” he says. To get deeper, he recommends longer (60-to-90-minute) “cofounder dates” every month or every quarter. At these meetings, you can check in with each other about how you’re communicating as a team, assess how the relationship is going, offer feedback to each other, and ask how you can be a better teammate and leader.

When you have conflict, pause before you talk

Running a business can be tiring and stressful, and when you’re tired — physically or emotionally — you may fall back on your old ways of relating to people. Self-care is key. In addition to exercise, nutrition, meditation or whatever else you need to operate at your best, Jones recommends journaling to express your emotions. Take the time to journal digitally or on paper, holding nothing back. Then translate those thoughts into professional points you can take back to the conversation.

“It’s difficult to get out of quick-reaction mode,” Walling says. “But when there’s a conflict, almost always one of the best rules is to pause.” Let each person have quiet time and regroup. Once you’re both calm and centered, you’re in a better position to get your partner’s perspective.

Learn to disagree productively

When you go into business with a partner, disagreements can and will arise over a variety of issues, such as equity and pay, roles and responsibilities, and the strategic vision. “What starts as a business issue can become unproductive because of the unspoken emotional dynamics between the partners,” says Jones. And friends, of course, have a longer history of emotional dynamics.

Friends who care about each other’s feelings may avoid bringing up issues that are crucial to the business but that may cause friction, Sabbini says. “There can be a big cost to that,” she says. As with couples therapy, active listening can help. Sabbini recommends listening to what your partner is saying, then saying it back to them in your own words so the person knows how you’re interpreting it. “When there’s a lot of emotion, there can be a large discrepancy in how each person is perceiving the situation,” she says.

Starting a business with a friend can enhance your relationship or strain it. By learning how to have healthy money conversations, you and your friend are more likely to enjoy a personally and professionally rewarding partnership.

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