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Why You Should Never Hire Your Friend

Friends working together at sidewalk cafeFriends working together at sidewalk cafe

The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What are some common mistakes young entrepreneurs make?” is written by Ed Kaplan, founder of Zebra Technologies and title sponsor of the Edward L. Kaplan ’71 New Venture Challenge startup business launch competition at the University of Chicago Booth School of Business.

It takes courage to become an entrepreneur. The most common mistake I see up-and-coming entrepreneurs make is underestimating how difficult it is to start your own business. Deciding to become an entrepreneur is one of the biggest decisions you’ll make in your life. You need to consider upfront: Do you really have the courage, the aptitude, and the skill to be a successful entrepreneur?

As an entrepreneur, you are going to face some really tough situations. You need to be realistic and not let your ego run away with you. If your ego is driving you to go into business, it’s not the right reason.

The really successful entrepreneurs—business owners who achieve sales growth and profits—never forget these three words: sustainable competitive advantage. If you don’t have a sustainable competitive advantage, don’t start a business. All three words—sustainable, competitive, advantage—are a really big deal.

If you are doing something that is different but easy to copy, you have an advantage for a moment, but it’s not sustainable. If you neglect to pay attention to your rivals and thoroughly understand what is happening in your market, you won’t be competitive.

When bar-coding was starting to become popular in the 1980s, more than a decade after my business partner and I founded Zebra (ZBRA) (originally called Data Specialties Inc.), we sent teams of people to trade shows to find out everything they could about the bar-coding and scanning market. We talked to people in the booths and on the trade show floor. We asked: Who is your competition? What is your competitive advantage? What is your distribution channel? It’s important to really understand your market and to look out for your competition.

See also: 4 Ways to Avoid Killing Your New Startup

Don’t hire your friends
When I first started out, my father told me to never hire a friend because conflicts and challenges would emerge. I didn’t listen.

It’s handy to hire friends when you’re just beginning. You know them. You trust them. You understand their ethics and their skills. But you also have to be willing to fire them if keeping them on the payroll means your company will suffer, or even fail.

In my early days, I hired a friend from college. We worked at the same company after college, and he was an engineer like I was. But he just didn’t have the skills our startup needed at that time. I sat down with him and explained why I had to let him go, and he understood. But his wife didn’t. She wouldn’t talk to me, and, in the end, he was cold to me as well.

Replacing an employee is challenging, but replacing a good friend is harder.

Rally the support of your family
Having plenty of support from your friends and family is extremely important, and most entrepreneurs don’t give that simple fact enough thought. Your way of life as an entrepreneur is going to come at a cost to your family. You won’t be spending as much time with them. You will get irritable. You will get frustrated. There is a lot of stress and sacrifice involved. Your spouse or significant other needs to buy into what you’re doing and really understand it’s going to be a rough road.

I was working a full-time job as an engineer when my business partner and I started the company. We worked every weeknight from 5:30 p.m. to 11 p.m. and all weekend. There was little time for family. I put up my house as collateral for a loan, and that was a big sacrifice for my wife who was pregnant at the time and anxious about losing our home. When I needed a car to drive across country to call on prospective customers, my brother lent me his. I slept in that car many nights on the road.


Don’t ask your dentist to invest
Be careful who you ask for money to invest in your company. If they don’t understand what you’re doing or what you’re up against, it could backfire. My partner’s dentist was looking to invest some money, so he invested in our startup. Then he wanted the money back. And we couldn’t give it to him because we didn’t have cash. The money was invested in the raw materials and the labor to get us going—startups aren’t liquid investments.

It sounds obvious, but many entrepreneurs are so focused on raising enough funding to get off the ground that they forget to secure a source of capital that they can draw on when something unexpected happens. Even if you have a revolutionary product and you know your market perfectly, it’s going to take time to build your business. There will be unanticipated forks in the road—many of them. And it is wise to be prepared.

While starting and growing a business has its challenges, risks, frustration, and stress, it also has its rewards. When you start a business, you provide an opportunity for people to grow and develop. The quality of their lives will improve. They will develop a sense of satisfaction with their lives. It is not just about achieving goals. It’s about smelling the roses on the road to success.