Questions to Ask Yourself Before Becoming Business Partners with a Friend

by Logan

“We should start a company.”

At some point in your life, someone may speak those words to you, or you to them.

In 2014, a year after graduating from Indiana University, I started to hit my stride in an inside sales position at Angie’s List. At the same time, I became friends with a guy about my age who started an interscholastic video gaming league. After sitting in on a few of his gaming events, I was hooked, and I started volunteering to help to develop the business.

At the time, we were running tournaments in only three or four schools, and we weren’t making a penny. Fast forward 9 months, I helped to double the amount of schools enrolled in the program, and I decided to quit my six-figure sales job to blow up this small gaming startup.

As soon as I did that, the proverbial shit hit the fan. Though we had discussed sharing duties – prospecting new schools, connecting with school officials, and securing sponsorships from local businesses – it didn’t take long before the most important roles were shifted to me, and me alone. This is not what we had discussed.

As time went on, more red flags started to appear.

From the beginning, I had pushed to have our agreement down on paper and signed by both of us.

That never happened. I had signed up the most prominent, private school in the city, only to have my business partner all but sabotage the first event through his negligence. Had this event gone well, we would have doubled our monthly revenue.

After months of broken promises and zero revenue to speak of, I came to the conclusion that the only way I was going to move forward was by ending my relationship with the company. This experience left our friendship in shambles, and it would never rebound.

It was really difficult making the decision to leave the company, after giving so much of myself to it. It made me question my judgment. Should I have joined in the first place? I felt like a failure, and sure, a business venture may fail, but that doesn’t mean I’m a failure.

Though my dad owned and operated a small asphalt maintenance company when I was younger, becoming an entrepreneur was not high on the list of potential careers for me. Yet somehow, through the ending of that relationship, and many other tenuous, terrifying decisions, I’m on my way to calling myself an entrepreneur.

I’ve realized that there are many factors that determine success or failure. Yes, the profit/loss statement is one metric, but arguably, the most determinative factor in a predicting the success of a business starts with the founders.

So, when you are asked to start a business, consider asking yourself the following questions. If you answer no to any question, that should be a red flag.

  • Are they going make it official in writing?
  • Does this person hang around growth-minded people in and outside of work?
  • Does this person have a stable home life?
  • Is this person resourceful?
  • Is he/she a doer (compared to someone who just talks a big game)?
  • Has he/she started a business before?
  • Am I prepared to spend years working closely with this person?
  • Does my family approve of this person?
  • Does he/she have stamina and mentally resilience?
  • Is this a person of financial means, or at least knows how to generate income?

This list is hardly exhaustive, but you get the picture. It all boils down to the character of the people involved.

In addition, you can pose these questions to yourself (about yourself) too, as a way of investigating if the timing is right for you to begin this new venture.

At the end of the day, going into business with someone should be deeply thought-provoking. You have to weigh the pros and cons and consider what you will gain tangibly and intangibly from the partnership.

What makes a good friendship doesn’t necessarily make a good business relationship. Sometimes, from the outset, it can be hard to differentiate between the two. I’ve learned I can’t trust my heart to the exclusion of my head; at the end of the day it’s business.

Be fearless in your hustle, but be smart about your grind.

Be flexible in your approach, but steadfast in your values.

And above all else, be true to yourself.

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