10 Cardinal Rules for Working with Friends

How to protect both your business and your closest relationships when you decide to work with friends.

Ask any business owner if they’ve ever gone into business with friends, and you will probably hear “yes.” How they respond (with a frown or with a grin) will tell you whether it turned out positively or not.

One of my clients is WAKA, an 18-year-old organization that has made kickball and social sports for young professionals a mainstream phenomenon. The three founders have been close friends for more than twenty years. They have truly learned how to make “working with friends” work. This doesn’t mean they’ve avoided tension or disagreements. In fact, one of my primary responsibilities with them was helping them break through a period of stagnation that was blocking their continued expansion. They have bold growth objectives for the next 3–5 years, and making every decision by consensus was slowing their progress.

Nevertheless, these three long-time friends have managed to preserve and deepen their brotherly connection as they’ve grown their company. So how have they pulled it off? They’ve followed what I have come to define as the 10 cardinal rules for working with friends.

1. Alignment of Core Values About Life and Business

It may seem obvious that our friends share our values, but that’s not always true. If we’re entering into a venture with anyone, there must be clear alignment of values. If you are a premium, high-value service provider but your friend is intent on competing as a low-cost provider, you’re not striving for the same outcomes. If you are a workaholic, but your friend prioritizes work–life balance, you’re misaligned in focus. A mismatch in core values is a deal-breaker.

2. Clearly Defined Roles and Responsibilities

What is each person accountable for? You would never bring on a stranger without clearly outlining their role and responsibilities. Do the same with friends. Explicitly document what you expect from anyone you collaborate with, and what they can reliably expect from you.

3. No Exceptions to Any Rules: All Policies and Processes Apply

When I launched my first company, Information Experts, 20 years ago, I brought on a friend as a subcontractor. She was required to sign a non-compete and a non-disclosure agreement, just like all of my other subcontractors. If I had made an exception for her, it would have sent the message that the rules only apply to some people in my company.

Unfortunately, she violated both agreements. She copied my content and directly pursued work from my client. Once again, I had to set a clear precedent. Our attorney sent a cease-and-desist letter requiring her to stop soliciting. My client cut ties with her, I terminated her contract, and our friendship ended. This circles back to Rule #1: alignment of core values. She prioritized money over our relationship.

⚠️ Warning: The moment you start bending rules for friends, you undermine your credibility and your culture.

4. Respect for Financial Agreements

Mixing money and friendships—especially in a business context—can be a minefield. If you choose to collaborate with a friend, do everything you can to minimize financial tension. Avoid loans and promissory notes whenever possible. Pay your friend promptly, according to the terms you’ve both accepted. Working with a friend is not a license to take financial liberties or delay payment.

5. Respect for Each Person’s Value and Worth

This past week, I spoke with two close friends who own businesses and are recognized experts in their fields. Both feel dismissed, underappreciated, and taken for granted by friends they’ve worked with. In each case, they chose to offer their friends deeply discounted pricing for their services. This is almost always a bad strategy, and it frequently backfires.

A genuine friend would not expect another friend to lower her market rate, which essentially communicates, “I don’t believe your work is worth what others are paying.” On the other side, the friend who discounts her rate often ends up feeling like she is giving her services away. The outcome is almost always, “I felt bad,” or “I felt guilty.”

💡 Pro Tip: If you choose to offer a discount, define it clearly, limit it in scope or time, and make sure it still feels fair to you.

6. Create a Clear Exit Path from the Business Arrangement

Every business relationship needs an “out” clause, and this situation is no exception. Talk in advance about the possibility that one of you may want to end the arrangement. If that happens, exit with grace and professionalism. Don’t make it personal, and do your best not to take it personally.

7. Honor Confidentiality

As with any professional partnership, do not share your business matters with others. Don’t reveal proprietary information, don’t talk about internal challenges, and don’t gossip about the relationship. Treat the business side of your friendship with the highest level of discretion and respect.

8. Willingness to Have Tough Conversations

Hard conversations are uncomfortable. When we blend our personal and professional lives, there is a lot on the line if a difficult dialogue goes badly. However, avoiding the conversation is even more damaging. Trust that you can engage in a respectful, constructive discussion, and commit to having it so you can move beyond any resentment or anger that may be building.

“Silence doesn’t protect the friendship; it quietly erodes it.”

9. Nurture the Friendship Outside of Work

To safeguard the friendship, intentionally set aside time to simply be friends. Meet for lunch, see a movie or visit a museum, or text/email/call with no business agenda—just to check in and say hello. Your relationship needs space that isn’t about work.

10. Remember: Don’t Take Yourself Too Seriously

Finally, remember Rule #6 from my last column: Don’t take yourself so seriously. At the end of the day, it’s just business. Companies start and end, but our most meaningful friendships have the potential to last.

A Note About Mentorship, Donated Services, and Trades

We all have so much to offer others. Mentorship and pro-bono or reduced-fee services are powerful ways to help people progress, especially when we can support socially impactful organizations in advancing their missions. When we agree to mentor someone or contribute our services to a non-profit, we still need to define the terms clearly so both sides understand what to expect. The only thing missing is the exchange of money.

I have also engaged in many successful service-for-service trades. Again, lay out all terms and conditions in writing so there are no misunderstandings. These arrangements are still business relationships, even if no cash changes hands.

📌 Key Takeaway: Whether you’re mentoring, donating, discounting, or trading services, clarity of scope and expectations protects everyone involved.

In Other SC News…

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I recently celebrated about 40 SC clients at our annual Customer Appreciation Luncheon. I spoke about the unique gifts that each client brings to the world through their own business achievements, and I expressed my deep gratitude for their trust in my leadership to help them advance to their next levels of growth. Everyone made meaningful connections as well! I’m already looking forward to our spring community gathering. Will you be partnering with Successful Culture to support your growth—and joining us there too?