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What are the benefits of starting a business with a friend?

On Behalf of | Aug 10, 2023 | Business Formation And Planning |

Starting a business can be a massive undertaking, making it reasonable to ask for help from others, such as family or friends. Having a co-founder could make the responsibilities of establishing a business seem more doable. However, some business experts might advise against doing so since personal relationships could affect objectivity when managing business operations.

While this might be true in some cases, others share that starting a business with a close friend or family member can yield benefits, depending on the circumstances. The following factors could be beneficial when forming a company with a long-time friend:

  • Trust between founders: Trust is often crucial when making significant business decisions, including hiring, task delegation and strategy development. Doubting each other could lead to disputes, fostering instability detrimental to the business.
  • Open and efficient communication: Conflicts sometimes arise from misunderstandings or misalignments. Communicating openly, such as how friends speak to each other, could minimize these issues.
  • Similar values and beliefs: When business founders share similar values, it can manifest in how they conduct business. This factor can also affect how they make decisions and plans together.

However, personal relationships can impact significant business matters that require objectivity and rational decision-making. Co-founders could address these concerns with comprehensive business formation practices. Seeking reliable legal advice and services also helps business owners create formal procedures and guidelines to maintain impartiality when resolving disputes and other business issues.

Structuring a business based on its unique needs

Many people find it challenging to form and develop a business plan, whether starting it alone, with a friend or with multiple entities. Legal requirements could vary depending on the business’s services and and products and the stakeholders involved.

It might be easy to finalize these decisions alone. However, getting help from a co-founder or an attorney could help establish a legally sound business structure with safeguards addressing problems and potential disputes.