Honest critique can be difficult to accept and often harder to deal with, but should always be welcomed if one is to succeed as a writer.
Family find it difficult to offer unbiased critique for many reasons, not least of all that they don't want to upset you. Friends, too, can feel embarrassed when asked for their view on your work. Imagine the dilemma: Do they tell you the truth about it, and possibly lose your friendship? Or lie ... and lose your friendship when someone braver tells you the truth. Don't put friends in that position. It's not fair on them.
If friends do ask to read your manuscript (your baby - that you have sweated blood over for two years) and you insist they give you their "honest opinion" be prepared for the outcome. If they return your manuscript saying it's brilliant, that they couldn't put it down, but have a couple of minor points for your consideration, you'll feel good and ready to accept the points they put forward. However, if they say it needs its guts ripping out and replacing what will you do? Cut them off and never talk to them again? Or ask them why they have that view and listen to what they say? My advice is listen - they might be wrong, but what if they're right and your story does need major surgery? Thank them for their candour, get as much information from them as you can and be objective about what they've told you.
Of course, you could pay a professional to critique your work or, less expensively, join a writer's group where you will get free critique in exchange for giving it on other members' work, usually, on a weekly basis. As a rule, this reciprocal arrangement works very well for all concerned. You may even find that one or more of the members is only too happy to read and comment on your full manuscript. But do expect to have theirs offered in return for critique at some stage, if not immediately.
Now, this shifting of the shoe to the other foot, is where you may start to wonder if you're up to providing a critique, if you have enough experience in the business of writing to be taken seriously. I remember thinking this years ago when I was first asked to give comment on a piece of work that a group member had read out. My hesitation and subsequent excuse: that I didn't feel qualified, was shot down when the chairman asked: "Do you read?" I nodded. "Then you're qualified to give an opinion." He was right. You don't need a degree in Creative Writing to give a critique - it's an opinion, your view on what you're reading. All critiquing is an opportunity to learn - whether it be learning what to do - or what not to do.
So, what are you going to look for in this manuscript that you've been given?
Does the opening grab you? Is there a hook?
Do you care about, or have empathy with the characters? Are they believable - or flat?
Does the dialogue sound authentic, or stilted?
Does the dialogue move the story on, or is the author trying to preach through the character?
Are there too many points of view? Is the story slow because of it?
Does the plot work? Does it carry you on through the story or does it dodge about for no reason?
Does the author give his / her scenes a good sense of place?
Is there consistency in the storyline and timings?
Is the formatting and grammar correct?
How did you feel when you finished the story? Satisfied - dissatisfied? Cheated?
Would you want to read more stories by this author?
Remember, in your critique, to be constructive, honest and to the point. Placing a tick in the margin against elements (sentences and good turns of phrase) that impressed you, not only lets the author know what worked particularly well for you as a reader, but can help to lessen the impact of what is, after all, criticism - no matter how nicely you might have expressed it.