My friend and I are in high school and want to try start a business. What things should we talk about before hand so that we can have less disagreements and confusion later, if we don't fail, so that we are less likely to stop being friends?
My friend and I want to start a business, what should we talk about and agree on first?
byu/LiterallyWantDie inEntrepreneur
Posted by LiterallyWantDie
12 Comments
Top 3 are:
– How are you going to split the earnings ( how much will you reinvest into company)
– What each of you will be tasked with and how it will be measured and compensated
– How you will decide on things when there isn’t an agreement
Example: one of you wants to hire a VA and the other one wants to buy software/ tool
Also since you are in highschool I recommend you stay disciplined with your goal and not really care about how cool others might think of you whether you are winning or losing.
If at any point you see that your partner isn’t doing what he has to, don’t be lenient because he’s “your friend”. You will lose money and probably stop being friends either way if he doesn’t respect your boundaries
Doing business with your friend can be amazing but its also risky. What type of business? Why? What is the purpose of the business? Who does what? Will it be a 50/50 partnership? Who and how are decisions made? How do you guys compliment each other when it comes to your strengths?
Put it in a contract you both feel comfortable with. Always get it in writing.
From my experience (bad): Read about vesting and stablish a shotgun clause.
Create a clear goal for the company.
Agree on salaries and bonuses and how much is invested back into the company.
Agree on how one of you can exit and what would cause that exit if it’s not working out.
Agree on company ownership split and voting rights, prepare for adding on additional owner either through employees or investors.
Manage expectations. Revisit, and revisit expectations. Depends on how much time and energy are put in. Is this is small web business product side hustle, or a complex housing project including family assets, and possibly connections?
Most of all, have fun,
don’t try to sign up the rest of your life if you can both agree on that.
Of course, if you can revisit your expectations in 3 to 6 years and commit to this as a 22 or 23-year-old when there is more at personally stake , and more experience with the market opportunity, that’s great too
Never ever do business with friends , family.
1. Equity split (make sure there is always 1 person who calls the shot)
2. Responsibilities
3. If one decides to quit, what is the protocol and what to do with that equity
If you both can identify what strengths each of you are contributing or bringing, and what you value in the other that is also a great thing to revisit on a at least yearly basis.
Are there people in your local area that you could sit down with together once every six months or annually to get a third-party opinion?
Ideally a neutral opinion, but with some industry or market experience.
What are your roles, clear that not always anyone between you will have the ability to put 100% focus on the business and most important clear out and define your goals and what you want to achieve.
I had a business with a highschool friend, it was very successful, we made a bunch of money, we don’t talk anymore really.
When you start a business with someone it’s like getting married to them, and the business is your child. There is a strong change that your marriage ends in a bitter divorce, and you lose a friend. Be aware of that going in and decide if that risk is worth it.
You need to have be very clear about three things
1. Role
2. Responsibility
3. Finances