I want to launch a hair salon with my best friend – should we form a partnership or keep income separate? Dave Fishwick replies

My best friend and I are talking about launching a hair salon together. We have both been working in the industry for more than a decade but always for other people. 

We want to start our own salon and have found a space that we can rent cheaply. We already have many potential clients and are confident it will work.

Given that we are both self-employed in the salons we work in, we thought it would be best to rent the space and work with our own clients. Then in a few years we could get some more stylists to use the space.

I want to launch a salon with my friend but I don’t know whether to keep our income separate

We’ll obviously share the rent and bills 50/50, but given that we’ll have a different client list and therefore income, I’m not sure what to do.

I trust her but I don’t want our good relationship to turn sour over money, should that happen. 

Is it best to keep income separate or should we create a limited company and split everything?

Dave Fishwick, This Is Money’s business doctor replies: I’m not a big fan of partnerships because you will always have slightly differing views with your partner on things like opening times, staff recruitment, advertising, and many more costs.

Inevitably one of you will probably end up doing more of the work than the other.

That being said, I do know a hair salon in Whalley, Lancashire, that has seen two best friends team up very successfully to build a great business.

The girls have known each other since they were eleven, hence their name Eleven Hair.

The two girls, Jinny and Vicky, have kept their own established clients from previous salons and split the rent, rates and electricity costs, which is all working out very well for them.

My wife Nicky cut the ribbon to the new venture in the summer and they’re doing well.

As you’re already self-employed, this idea seems like a safe bet.

You’re confident that the work will continue to be there, and I see no reason why you shouldn’t continue to be successful in new premises, maybe even more so as you can put your personal touches to the styling and marketing of the salon.

If you both intend to carry on with your own clients and just share the premises, it seems logical to do as you suggest initially and split the overheads evenly but otherwise keep your finances separate.

This would be the most straightforward and fairest solution to start with and gives you flexibility and control over the hours you work and the income you earn.

As you say, you both have regular clients and your service is unique to each stylist, so as things stand, it’s probably safer for your friendship and the general goodwill in the salon to keep your finances separate for now.

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Dave Fishwick, right, and Rory Kinnear who plays him in film Bank of Dave

Dave Fishwick, the man behind Netflix’s Bank of Dave, is This is Money’s small business doctor.

If you want to start a business or have a question about running yours, email to ask Dave here.

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It’s also likely that your circumstances aren’t the same as your friend’s. 

Along with the demands on your time outside of work and your income requirements will likely differ too.

You could develop the business by renting out salon space or time slots to other stylists as you’re currently paying for.

Alternatively, you could rent some space to a beautician, using the income to cover more of the salon overheads. 

This would allow you to still keep your finances separate, and any income over and above the overheads could be split evenly.

Whether to combine your two businesses into one business depends on how you see the salon as a whole developing.

It would probably make sense to combine your businesses if both of you decide to do fewer hours yourselves and directly employ stylists.

If you take on staff and market the salon in its own right, rather than advertising your own personal brands, then it would become too complicated to keep your finances separate.

There would also be the issue of potential competition between stylists, causing potential disagreements, so combining into a single business becomes the logical option at that point.

You’ll likely work out any differences if you’ve been friends for so many years without falling out. 

Resentment is only likely to creep in if one of you thinks you are carrying the other by doing more work but not being rewarded for it.

The best way to avoid this is to be upfront and open with each other, regularly discussing things rather than keeping quiet and letting things stew. 

What also might annoy you is introducing new ideas without consulting the other.

So, the first thing I would do is go for lunch with your friend, talk over all the various ideas with her, and most importantly, write them all down on paper (I call these the ground rules). And you both need a copy to refer to at any time in the future.

Working independently of each other is the key to a successful partnership, and sharing rent, rates, and bills makes a lot of sense. 

I’m sure it’ll work out fine, and I wish you the best of luck.

This post first appeared on Dailymail.co.uk