How you relate to your students is a big part of who you are as a teacher and it's what sets you apart from your colleagues. I've found that there's an inverse relationship between how much you need to be liked by your students and how much progress they make as musicians.
You should absolutely be kind and empathetic to your students; this is just part of being a good human being. It's great to recognize and celebrate their successes and create an environment where they can be inquisitive without fearing judgment. However, you do your students a disservice if you let substandard progress slide because you want to avoid a confrontation.
As someone entrusted to teach others, you have an incredible and humbling chance to be a role model to people who are trying to figure out what being an adult means. Your influence extends beyond the music studio; your students will remember what kind of example you set regarding timeliness, preparation, and how you interact with others.
Don't take this responsibility and privilege lightly.
Push your students. Demand their best, and make sure they know that their best is a daily expectation, not a special event. This might mean telling them that they aren't practicing enough. This might mean telling them they need to arrive on time, not five minutes late. They might resent you a little. And that's ok. They'll know that you do it because you care and you want the best for them.
At the end of the day, a friend is there to support someone no matter what they choose to do, but a teacher's role is to show someone the right path. When you're in the studio, remember which thing you're there to be.