Starting your own business with a trusted pal sounds like the dream - but there are five hard-to-pose questions you need to ask each other first.
Going into business with friends is a bit like cooking a flawless risotto: get it right and you could be the mastermind of something truly magical, get it wrong and the end result (read: your friendship) could be unsalvageable. Nimble Activewear co-founders Vera Yan and Katia Santilli know a thing or two about mixing business with friendship. They launched their company from their lounge room in 2014, and four years on their annual turn over is $4 million. “Open communication with each other is key,” says Vera. “It’s important to ensure the friend you’re going into business with is on board for the uphill — and very rewarding — climb you have ahead to ensure your success.”
As icky as it might feel, speaking frankly in the early phases about your hopes, dreams and boundaries could mean the difference between success and failure. “We have faced many hurdles in the business but have both decided that we would persevere through those difficult times and continue on,” says Vera. “We both knew the other person’s position on the way forward, it made it easy to push through and work towards the same goal.” Here Vera and Katia share the five essential questions you need to ask before you go into business together.
Vera and Katie have grown their start-up from the lounge room to the boardroom
Question one: "How are we going to fund this thing?"
Talking about money is one of the last great taboos but being frank about finance is essential. “It’s really important to be up-front with your expectations about money as it’s what’s going to drive your business,” says Katia. Discussing things like whether you expect to draw a salary, how much you’re willing to invest and when and if you’re prepared to leave your day job are all crucial points to nut out. “When Vera and I started the business we both invested a portion of our life savings into Nimble Activewear. We discussed with each other the amount we were both comfortable with investing,” says Katia. “As we are a bootstrapped business, in the early days we needed to ensure we were not taking profits out of the business therefore when we first started we both continued to work our day jobs full-time and then in a part-time capacity for the first couple of years.”
Question two: "What is your creative vision for the business?"
It sounds obvious but having an open discussion about how you envisage the business looking — from the branding to its market positioning — can help prevent creative differences down the track. “Again, honest and open communication is crucial here. Being on the same page is important but the power of going into business with a friend is that you can challenge each other and approach things in a different way,” says Vera. If you don’t agree with something they’ve said, speak up; now is not the time to be a wallflower! “If your goals aren’t aligned with your friend, things could definitely unravel so be upfront before you dive in so that you can iron out any potential clashes of interest before it’s too late,” Vera says.
Question three: "Who is going to do what?"
It’s normal when you’re starting out to have a hand in every facet of the business. “In the early days you and your friend are going to be doing absolutely everything — from the social media and marketing to bookkeeping and product development,” says Katia. “This will make it easier to both be able to make decisions quickly and support each other as the business grows.” But once things start to take off, it makes sense to divide and conquer responsibilities. “Sit down and look at each other’s job roles in current or previous jobs and what you each like doing but also the skills that each of you has and then tailor your roles according to those skills,” says Katia. “There are always going to be plenty of things that neither of you wants to do but that is fundamental to the ongoing success of the business — once you figure out each other's strengths and weaknesses, you can then allocate those tasks… Someone will naturally be better at these even if neither of you likes doing it. Go with the person whose skill set will mean that they can execute this better! “
Question four: "Why do you want to start the business?"
So you want to launch a business together, but have you discussed why you’re doing it? Maybe one of you is looking for a fun, creative outlet on the side while the other is hoping to completely reinvent themselves professionally. Better to know now how serious you are than three or six months down the track when one of you is working much harder than the other. “It’s a total myth that owning your own business means you’ll be working a four-hour work week while the money rolls in,” says Vera. “While we might put in long hours and work weekends we wouldn’t change it for the world because we love it. If your partner is wanting to cruise, you’re going to have issues. It’s also important to realise you’re going to be hanging out with each other around the clock… if you don’t think you could be around your mate 24/7, you might need to reconsider.”
Question five: "How long are we going to give this?"
The excitement of the start-up phase can be overwhelming and the climb to get to launch may seem so intimidating you can’t think past the next three weeks, let alone three months or years. But talking about where you’d ideally like to be in two, three and five years time is essential. “Discussing expectations is really important especially around what size of business you want to create. Also understand each other’s exit points,” says Katia. “This might change over the years but if someone wants to create something they want to exit in 5 years and the other is in it for the long haul then you might face some issues down the track.” Discussing how long you’re willing to work at it is also key. “In most businesses, you are unlikely to be making money initially. Rather, in addition to perhaps not drawing a salary, you may need to both be investing additional resources to continue funding the growth of the business,” says Vera. “A chat about how long you expect for the business to take off is an important one, however sometimes this may not be something you can control entirely. Rather than a commitment to time frame, it is important to be very clear at the beginning in terms of the amount of financial commitment that you are both prepared to make to grow the business.”