Working with Friends in a Small Business: Pros and Cons

In this issue we feature two inspirational friends that became business partners too. For many entrepreneurs, the idea of working with friends seems like the perfect solution. Who better to build a dream with than someone you already know, trust, and enjoy spending time with? However, while teaming up with friends can offer numerous benefits, it also comes with its own set of challenges that shouldn’t be overlooked.

Here’s a look at the key pros and cons of working with friends in a small business:

Pros

1. Trust and Familiarity

When you work with friends, there’s an inherent level of trust that can take years to build with new partners or employees. You already know each other’s personalities, strengths, and weaknesses, which can lead to smoother collaboration and decision-making.

2. Shared Vision and Values

Friends often share similar values, goals, or work ethics, which can make it easier to align on business objectives. This shared vision can fuel motivation and create a more cohesive company culture from the start.

3. Open Communication

Friendships are typically built on honest communication. This can foster a working environment where people feel comfortable expressing opinions, challenging ideas, or offering feedback—all of which are vital for business growth.

4. Boosted Morale

Working with people you like can make long hours and stressful situations more bearable. A friendly environment can increase job satisfaction and make the workday more enjoyable.

Cons

1. Blurred Boundaries

Mixing personal and professional relationships can lead to blurred lines. It can be difficult to separate business decisions from emotions, which can lead to poor judgment or favoritism. Friendships might make it harder to have tough conversations or hold each other accountable.

2. Conflicts Can Get Personal

Disagreements in business are inevitable. When friends are involved, these conflicts can spill into personal life and strain or even destroy the friendship. Unlike with a colleague, it’s harder to “leave it at the office.”

3. Imbalanced Contribution

In a small business, every team member’s effort is crucial. If one friend isn’t pulling their weight or lacks certain skills, it can lead to resentment. Since the relationship is personal, addressing performance issues can be uncomfortable.

4. Financial and Legal Risks

Starting a business involves financial investments and legal responsibilities. If the venture fails or money becomes a point of contention, it can damage the relationship permanently. Formal agreements are essential—even between friends.

Best Practices for Success

If you decide to go into business with a friend, consider these tips to help preserve both your friendship and the business:

  • Set clear expectations: Define roles, responsibilities, and boundaries from the beginning.
  • Create formal agreements: Treat it like any other business arrangement with contracts and operating agreements.
  • Maintain professional communication: Don’t let personal dynamics interfere with business decisions.
  • Check in regularly: Have honest conversations about how the relationship and business are evolving.
  • Have an exit plan: Discuss what will happen if one person wants to leave the business.

Working with friends in a small business can be rewarding, offering a foundation of trust and shared ambition. However, it requires clear boundaries, professional conduct, and mutual respect to avoid pitfalls. With the right approach, it’s possible to build both a thriving business and a lasting friendship—but it takes effort, honesty, and preparation.

Enjoy the issue!

Marcus Green

Editor