Starting with friends: partners, roles and agreements in writing

Starting something with friends can be the best part of entrepreneurship, and also the fastest way to lose a friendship. Clear roles, honest conversations about money and a simple written agreement protect both the project and the people.

Choosing who to start with

• Paul Graham writes that two to four founders is ideal: one person carries too much alone, while too many make disagreements harder to resolve.
• He favours people you already know, because 'being friends with someone for even a couple days will tell you more than companies could ever learn in interviews'.
• Before committing, work together on one small project, such as a weekend market stall, and see how each person handles deadlines, stress and money.
• Look for different skills (making, selling, organising) and shared values (honesty, how hard you want to work, halal and ethical lines you will not cross).

The conversations to have first

• Time: how many hours each week can each person give, especially around exams and family commitments?
• Money: who puts in what, how costs are repaid, and how any profit is shared or reinvested.
• Roles: who decides on product, money, marketing and customer messages. Decide who has the final say in each area.
• Exit: what happens if someone leaves, moves country, changes university or loses interest. This is the conversation people skip and later regret.
• Graham notes that equity splits are hard to change once set, and that a fair split is one where 'everyone feels they're getting a slightly bad deal'.

Put it in writing

• Write a one-page founders' agreement even for a tiny project. It is not about distrust; it is so everyone remembers the same thing.
• Include: names, what the project is, each person's role, hours expected, money put in, how profit and costs are split, who owns the name, designs and code, how decisions are made, and what happens if someone leaves.
• Everyone signs and dates it, keeps a copy, and you review it every three months.
• If you later register a company or take investment, get proper legal advice and turn this into a formal agreement.

Why the legal form matters

• GOV.UK says that in a UK partnership 'you and your partner (or partners) personally share responsibility for your business', including any losses and bills for stock or equipment.
• In other words, a partner's decision can leave you personally owing money. This is another reason for clear roles and spending rules.
• In the UAE, u.ae lists general partnership, limited partnership and LLC among the legal forms for mainland businesses, and says limited partnerships and LLCs need a Memorandum of Association.
• The right structure depends on country, activity and risk. Ask your university enterprise centre or an official business advice service before choosing.

When disagreements happen

• Graham says that with two or three founders, disputes must be settled immediately, and that you need unanimity, not 'mere voting'.
• Hold a short weekly meeting: what we did, numbers, problems, decisions. Write decisions down in a shared document.
• Raise problems early and about behaviour, not character: 'The last two orders went out late; can we agree a new process?' rather than 'You are lazy.'
• If you cannot agree, follow the exit section of your agreement. Protect the friendship first; a project can end well. The Friendships module's lesson on handling conflict can help.