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15 Reasons Why You Should Not Start Businesses with Friends

15 Reasons Why You Should Not Start Businesses with Friends

In the wake of the great recession, a generation of so-called ‘accidental entrepreneurs’ emerged and revolutionized the small business environment. This has triggered a gradual evolution in the workplace, which may result in an estimated 40% of the U.S. workforce alone being self-employed by the year 2020. Alongside the age of technological advancement, the changing economic landscape has made it easier than ever for friends and family to launch business ventures with minimal experience and financial resources.

However, just because people have the resources to launch a business does not mean that they should. Despite innovation and increased accessibility, the worlds of commerce and industry remain extremely difficult to conquer. From fluctuating financial markets and unique commodities such as gold to industry competition, there are multiple factors that can undermine a fledgling business and ruin a pre-existing relationship between friends and family members.

With this in mind, here are 15 compelling reasons why you should avoid starting a business with friends and family members: –

1. Friendship Does Not Translate into Business Compatibility

When starting a business venture with a friend or beloved family member, it is tempting to believe that your existing relationship will easily translate into a successful commercial union.

This is rarely the case, however, as even people with similar values and philosophies may not share the same approach to completing various business tasks. This can create significant conflict when establishing a business model or cultivating a company culture, which in turn has the potential to undermine even the most durable of relationships.

2. Friends and Family Rarely Plan for Worst Case Scenarios

U.S. attorney Mark J. Kohler specialises in disputes which unfold between friends and family members who have unsuccessfully attempted to launch a business. His advice is therefore extremely worthwhile, and he identifies one of the key issues is a lack of communication between aspiring business partners.

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More specifically, he advises friends and family members to consider all potential worst-case scenarios in detail before making a fixed commitment, so that they can develop viable contingency plans and prepare their friendship in the event of failure.

3. It Can be Difficult to Create Clearly Defined Business roles

The majority of friendships are formed organically, which means that there are no predetermined roles or structural hierarchies. The same cannot be said for business partnerships, which are forged by choice and constructed to include individual roles and responsibilities. This almost always requires one partner to take an authoritative, leading role, which can create imbalance in an existing friendship and ultimately cause unrest.

There may be a tendency among friends and family members to avoid this entirely, but this may expose the business to a critical lack of leadership.

4. Your Business Goals May Differ from Those of Your Partner

On a similar note, your motivation for launching a business may differ to that of your friend or family member. For example, while you may aim to realize the long-term goal of launching a successful business, your partner may want nothing more than to earn some additional money to supplement their existing income. This is entirely opposed to the foundation of commercial partnerships, which should be formed from a common goal and fixed business aspirations.

Such a gap in expectations can be devastating, as it can trigger arguments, undermine business growth and compromise friendships.

5. The Price of Failure is Far Higher

According to industry statistics and successful entrepreneur Theo Paphitis, an estimated 50% of all small businesses fail during their first 24 months of trading. Such failure often comes at a considerable cost to small-business owners, although this is often restricted to financial losses.

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For those who partner with a friend or family member, however, the failure of a business venture can create a strain that even established relationships are unable to cope with. This means that the cost of failure is even higher, as it can compromise both your personal and professional lives.

6. Financial Arrangements and Friendships Make for Uneasy Bed fellows

There is an old adage which suggests that you should never lend friends or family members’ money, and the same principle can be applied to launching a business venture. This is because each partner may be required to invest some of their personal capital into funding the venture, which in turn creates a financial arrangement that binds two friends in a legal contract. The issue with this is obvious, as a single act of negligence or irresponsible behavior by one individual can impact heavily on their partner.

If you consider the financial cost of successful personal injury claims that arise as a result of carelessness, for example, it is easy to see why friends should avoid funding a joint business venture.

7. You May Struggle to Plan Holiday’s and Breaks Away

Whenever you start an independent business with a beloved family member, you are placing an incredible strain on both your personal and professional time. Booking holidays or breaks away together in the sun can be particularly difficult, as this may expose your business to a lack of leadership at a critical juncture. Unless you have a trusted employee who can hold the ford and lead strategically in your absence, you may need to stagger your holidays and take separate breaks.

8. You Will Place a Huge Strain on Your Finances

While there are many reasons that you may choose to launch a business venture with a partner, benefiting from an influx of capital is one of the most prominent.

The cost of establishing a business can be considerable, so it is natural to share this financial burden with a trusted partner who can also add experience, strength and leadership. Starting a business with an immediate family member is an entirely different entity, however, as you may be drawing capital from a more restricted source and placing a greater strain on your finances.

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9. Friends and Family Business Ventures Usually Lack Expertise

Aside from the ability to provide an initial investment, a carefully selected, independent business partner can also bring considerable expertise and experience to your venture. You may need to compromise on this when partnering with a friend or family member, however, as there is a limited share of equity and it is important to retain the incentive to succeed. By sacrificing invaluable business knowledge, you could enter the marketplace without the necessary tools to succeed.

10. Emotions Can Often Override Good Business Sense

While the national divorce rate in the UK is set to decline thanks partially to the dwindling popularity of marriage, it is still estimated that 42% of all marital unions will end in divorce. This underlines the challenges facing married couples in 2015, especially when you consider the financial pressures caused by rising property prices and stagnating earnings.

The same principle can be applied to familiar business partners who are emotionally invested in one another, as periods of hardship can damage the relationship and cause both parties to act irrationally. It is therefore easy for emotions to override sound business sense, and this can quickly sound the death knell for any commercial venture.

11. It Can be Hard to Appraise Your Partner’s Performance

While honesty should be the bedrock for any successful and meaningful friendship, it can be hard to administer a frank and withering appraisal of those closest to you.

According to Wayne Rivers, who is the President of the Family Business Institute, this can cause a significant issue when friends and family members partner in business. More specifically, it often leaves faults unaddressed and causes operational issues to continue longer than they should. While third party assessments can be sourced and paid for, the potential impact of negative criticism can still damage existing relationships.

12. Relationship Breakdowns can Divide Entire Families and Friendship Groups

While we have discussed the impact that a failed business can have on the relationship between friends and family members, it is important to consider the consequences once conflict has begun to take hold. The fall-out between two family members or close friends can trigger huge divides, and cause even the tightest-knit of groups to splinter and form rival factions. This can lead to an ongoing and acrimonious dispute that involves multiple parties, while leaving a family or friendship group in tatters.

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13. Relationships Can Suffer Even When the Business Venture Succeeds

Entrepreneur and Moz founder Rand Fishkin has some interesting opinions on the partnership of friends or family members in a business environment. He claims that while relationships are likely to suffer under the pressure of a failing business, there is also a strong possibility that they will also crumble if a venture proves to be successful. After all, the relentless pursuit of success can take its toll in a competitive market, and attainment can also change each individual’s outlook and create distance within a relationship.

14. Changing Circumstances can upset the Equilibrium of any Partnership

Over time, the market that your business operates in can change significantly. So too can your personal and financial circumstances, meaning that new challenges must be met with a flexible and suitable response. This can create significant inequity within a relationship, however, especially if one partner is suddenly forced to carry greater responsibility without reward.

If a business requires additional investment but one member of the partnership has fallen on hard times, for example, the other will need to fulfill this financial commitment without gaining any additional equity. This can cause considerable resentment and create a huge divide between once close allies.

15. The Business May Not Always be a Priority

Similarly, changing personal circumstances can alter our priorities and force us to spread our time more thinly. The advent of marriage or parenthood consumes a great deal of time, making it far harder to prioritize a business venture that has already been established with a friend or family member. Even if two partners have entered into an agreement with the same outlook and goals, these can quickly change in the face or rearranged priorities.

This situation can also occur gradually over time, leaving businesses exposed and left to decline without direct action being taken.

Featured photo credit: Paul Inckles / Flickr via flickr.com

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Last Updated on October 16, 2018

How to Quit Your Job That You Hate and Start Doing What You Love

How to Quit Your Job That You Hate and Start Doing What You Love

Everyone of us has a plan in our head that was taken over by family responsibilities, social pressure or sheep mentality. This made us a slave to instant gratification and started killing our plan and dreams.

There is a way to revive your plans and dreams and live a happier life. No amount of salary can exceed your desire to do something that you are really passionate about.

If you hate your job and have thought about leaving your job, here’s how to quit your job and start doing what you love:

1. Identify if you really want to quit to follow your passion

There could be many possible reasons to figure out why you are discouraged to go to work and start thinking about how to quitting your job. Figure out the reasons or signs that make you feel that you should really quit your job.

If these reasons are not related to your office environment or your ultimate goal is to pay your bills from your job, you should consider getting a new job in the same field. It’s better to be an experienced receptionist than to live a dream that is not yours.

2. Start with the side hustle and keep it going

Work after you get back home and build up your product or service enough to gain confidence to quit your job.

Build the website, write down the business plan, design your product, make marketing collaterals or do whatever it takes for you to start working full time on your new venture before quitting your current job.

You could also consider part-time working opportunities if your current job sucks a lot of your energy. This way you could save your energy and dedicate more time to your side hustle.

Ensure that you don’t quit until your new venture really demands your full time dedication. You might lose interest in your new venture if you fall short of survival money.

3. Save enough to pay your bills

If you need to pursue your passion, you need your monthly bills to be taken care of, without any worries. You must cut down on unnecessary expenses and squeeze in those extra bucks on your savings while you are at your current job. You should forget those weekend parties and social outings unless they’re meant for networking.

It makes no sense to quit your job without having any savings. Your new venture will not start paying you immediately. Starting a recurring deposit account is a good idea to start off with. Put aside a considerable amount every month as soon as you get your paycheque and forget about that money until you quit your job.

4. Write down your goals

It is important to have visual proof and a daily reminder of why you quit your job and started a new hustle.

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Write down your goals and read them at least once a week. If you are a forgetful person, create cell phone or desktop wallpapers of your goals and set them until you achieve them. Visual proof keeps you on track.

These goals are the bigger picture of what you wish to achieve in your pursuit to doing what you love.

For example, if you are wish to design the best dresses in the whole state, write it down. If you wish to fly to Mars, write it down. If you really wish to give up your career for something, it better be worth remembering everyday. Show it to yourself daily.

5. Make a plan

Write down a plan of action for the next 12 months. It’s like writing down an elaborate execution plan in your calendar. This could be a daily, weekly or monthly to-do list of your tasks to achieve your goals.

Learn how to make a plan if that’s not your area of expertise. Ensure that you know what you’re going to do next and not run like a headless chicken after two months of working for yourself.

Review the plan time and again to track your progress. This will give you a clear picture of your performance and your shortcomings.

Also, have a backup plan. Even great planners and strategists fail before achieving success. Ensure that you have a second plan if your first one does not work out as you predicted.

6. Get professional advice

Talk to experienced people in the field you want to venture out. Go to networking events and connect with people in your industry. Most people will help you out with good advice and good contacts.

Get professional courses in part time colleges. It could be great to network and the teachers can be of great help to understand more about the industry. They will help you analyse your plan and connect you to influential people.

7. Prepare yourself to put a resignation

Prepare yourself mentally to quit your job after you’ve realized the potential and prepared yourself to take a deep dive into your new profession.

Leave on a friendly note. Don’t make enemies with your bosses. These connections could help you further in your profession.

Don’t burn the bridges. It’s better to have a face-to-face conversation with your boss or reporting manager than sending a surprise mail.

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Tell them sincerely about your new venture and why it is important for you. Serve the notice period completely and work till the last day. Complete all your tasks as you would on a regular day. This will maintain your respect and keep your relationships intact.

8. Be prepared to get your hands dirty

As an entrepreneur, you have to do everything that’s needed to keep your work going.

You have to perform all the tasks needed to keep your new venture going. You have to be a janitor, an administrator, an accountant, a designer or a salesperson all at once.

There would be a point of time where you will have to perform tasks that aren’t your favourite. Be ready to perform such tasks without cringing.

9. Have no baggage

Don’t have a debt! Clear all your loans, debts and pending commitments before starting off. You want to fully concentrate on your new activity and not be bent down by loading your shoulders with any burden.

You would want to enjoy your freedom to work incessantly. No distractions whatsoever are allowed to come close to you when you are fully involved in the rhythm of development. Shun away materialism!

10. Don’t be in two minds

It’s good to analyze the best and the worst possibilities in your head, but it’s not at all good to doubt yourself.

Move ahead with confidence. It’s your life, your plan and your rules. Nothing and nobody can stop you from doing what you wish to do.

The more you start getting noticed, the more people will point fingers at you. Don’t let them affect you and create doubts in your head. As William Shakespeare said,

“Our doubts are traitors, and make us lose the good we oft might win, by fearing to attempt.”

11. Learn to handle failure

You are going to be a loser and it’s a good thing! If you fail and lose, you will learn to not repeat your mistakes and make yourself stronger with every punch you throw out.

It takes time till you start losing. The key is to not be demotivated by failure. The more the failure, the more closer you are to success.

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12. Try your hands at investing in stock market or cryptocurrency

It’s a good way to keep your side income rolling in. While you are busy building your dream project, you could invest your money in the stock market or cryptocurrency and let it grow while you sleep.

As Warren Buffet famously quoted,

“If you don’t find a way to make money while you sleep, you will work until you die.”

Find a good stock broker who has enough experience to not lose your money. Stop immediately if you are losing a lot of money. Don’t burn away your money.

13. Keep a healthy routine

It’s easy to forget about your health when you are working on something that you’re really passionate about. Set reminders about your health routine.

Exercise! Most successful people start their day early and take time out to exercise at least thrice a week. It helps you give more energy and time to your work.

Always remember that you started your new venture to be happier. Bad health will not let you enjoy your success.

Join yoga classes or learn meditation from youtube. Avoid sitting too long at one place for more than 15 minutes at a stretch, take breaks. take a walk, especially up-down the staircase as much as you can to skip age related joint pains and muscle atrophies.[1]

14. Enjoy your days off

Taking a break helps your creativity and clears your mind from clutter. You need your days off to come back afresh and take on your tasks. You can’t be working 24/7.

Remember that being able to take your days off is one of the beneficial quirks of an entrepreneurial journey. You can have a routine designed by yourself, for yourself.

Take your days off when you are too stressed and can’t think straight. Self-discipline might sound simple but practice takes ages. Schedule down time for yourself.

15. Take these steps to quit your job without burning bridges

Resume.io has this infographic about the steps you should take after you’ve decided to quit your job:[2]

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    16. Remember why you quit your job

    Lastly, remember why you quit your job and started doing what you love. There would be bad days that will make you regret your decision, but don’t let them dominate the reason why you took the plunge.

    Your soul wasn’t happy with what you were doing. Your new venture is what you always wanted to do.

    Never forget that.

    If nothing works out, you could still go back to any job you want, but at least, you’d be spared from regrets and constantly arriving “What if?” question in your head.

    So, start now and live without any regrets.

    Execution matters more than thought. Turn your dream into a reality starting today. Start small and grow big.

    Besides, it’s never too late to do what you want to do. Here’s the proof:

    How to Start Over and Reboot Your Life When It Seems Too Late

    Featured photo credit: Pexels via pexels.com

    Reference

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