If you’re looking for cofounders for your startup, your friends may seem like a natural fit. After all, you already know each other well and have strong rapport. But emotions can run high in friendships because you care deeply about each other, which may hurt your business in the long run. Here are some of the dangers of starting a business with friends to consider before you take the plunge.
Working With Friends Can Cause a High Turnover Rate
According to Harvard Business School, startups made up of friends are the most unstable with a 30% founder turnover rate. This is one of the main dangers of starting a business with friends, because you can’t build a company without strong leadership. Startups are already fragile with less ability to weather hard times and mistakes than established companies. Adding a volatile leadership team with high turnover into the mix can break a new business.
Before teaming up with friends, you have to make sure that everyone is willing to do what’s best for the company and avoid taking business matters personally. But when you have so much history together, it can be difficult to keep emotions out of your startup completely. This is why so many experts caution against partnering with friends and family.
You May Not Work Well Together
One of the dangers of starting a business with friends is that you won’t work well together. You may disagree about the company’s direction or strategy, causing a rift between you. If you have different work or communication styles, you may annoy each other and step on each other’s toes. And because you don’t want to damage the friendship, you may be more hesitant to bring up issues with your working relationship.
If you’ve never worked together before, it’s probably best to do a trial run. Before you jump into the deep end and start a business together, try working on a smaller project and see how it goes. If you can’t come up with a business plan or create a Kickstarter campaign without butting heads, it’s probably a sign you aren’t meant to work together professionally.
You May Lose Your Friendships
Starting a business is a big risk and can be an extremely stressful endeavor. You and your friends will all have a lot riding on the success of the business, such as your livelihood and savings. Tensions can flare in a fast-paced startup environment, especially when you have a lot to lose.
If you don’t agree with the way your pals want to run the company, you may start to silently resent them. Failing to address longstanding disagreements over business decisions can eventually cause you to blow up at each other. If you have a bad fight, it could damage your friendship and weaken the company. You might even end up having a complete falling out, which could fracture the business.
Your Friends May Become More Like Coworkers
Even if you and your friends work well together, starting a business will probably change the nature of your relationships. Because you’ll see each other all the time at work, you might not hang out as much on weekends. When you do meet up for a drink, you may talk about work the whole time instead of relaxing and enjoying each other’s company.
Working with your friends will likely be fun at first. But after a while, you may wish those friendships could go back to the way they used to be. Your best mates turning into boring coworkers is one of the main dangers of starting a business with friends.
Would you ever consider starting a business with friends or family? Why or why not? Share your thoughts in the comments below!
5 Side Hustles That Aren’t Worth Your Time
5 Things I Won’t Buy As a Solopreneur
3 Self-Care Tips For Entrepreneurs With Anxiety
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.