Simon Sinek: Look out for this red flag when starting a business with a friend: ‘It will breed resentment’

On a recent episode of his popular podcast “A Bit of Optimism,” host Simon Sinek asks restaurateur Will Guidara the question “Should you do business with your friends or should you not mix the two?”

The two are uniquely positioned for the conversation as they are close friends and worked together on Guidara’s book “Unreasonable Hospitality: The Remarkable Power of Giving People More Than They Expect.”

Sinek and Guidara agree that the answer is highly dependent on who the people are. However, Sinek could name one red flag that might signal you and a friend should not go into business together.

“If you have no money you shouldn’t choose a business partner who is a multi-millionaire,” Sinek said. “Because one of them is hungry and one of them isn’t. And the level of commitment they will give to the business will be very, very different. It will breed resentment.”

And once you start to resent a friend, it’s hard to salvage even the personal part of that relationship.

‘Don’t leave anything up to assumption’

To set yourself up for success when going into business with a friend, you need to explicitly state your bandwidth.

“The motivations have to be similar and very clear expectations set early on,” Sinek said. “Because we will make assumptions about the other person’s commitment.”

If you can only give 20% to a venture, say so. The other person can then decide for themselves if they want to work on a project where they are pulling more weight.

“You can go into business with friends so long as everything is on the table,” Sinek said. “Don’t leave anything up to assumption.”

‘You can’t stop being friends’

The reason these unions so often go awry, both Guidara and Sinek agree, is because people can’t separate the business part of their relationship from the personal part.

“You can’t stop being friends,” Guidara told Sinek. “You don’t replace the friendship relationship with a colleague relationship. You now have two relationships.”

And you need to learn to “code-switch” when you’re discussing a work problem versus a personal problem, Sinek said.

In a professional context, you might use a gentler tone or exercise more patience than you would a personal one.

“I think that’s where people make a mistake,” Sinek said. “They act like friends in the business context and they act like business in the friends context and they are conflating the two because it happens to be the same person.”

Want to make extra money outside of your day job? Sign up for CNBC’s online course How to Earn Passive Income Online to learn about common passive income streams, tips to get started and real-life success stories.

Plus, sign up for CNBC Make It’s newsletter to get tips and tricks for success at work, with money and in life.