By Meredith Wood
Sometimes it seems like a great idea to go into business with a family member. You hash out a fantastic business idea over a family dinner and you’re ready to go! However, there are both pros and cons to joining up with family in a business venture. It’s usually easier to get into business than to get out, so it’s a good idea to carefully think before partnering with a relative.
Pros of Family Business
You know their strengths.
Maybe you’ve grown up around this person. Maybe you’re married to them. Either way, you know that they have skills you lack and skills that will make your business better. A well-rounded leadership team will do great things for your company. It also may make it easier to decide what each person’s role in the company will be and forge ahead with an advantage of using each person’s strengths best.
You get to spend a lot of time with someone you like.
Says Pamela Skaist-Levy, co-founder of Juicy Couture, of going into business with her best friend, “You spend more time with a business partner than almost anyone…When you’re together, the highs are even higher and the lows don’t seem so bad.”
You already trust that person.
If they’re a family member you’re thinking of making your partner, chances are you trust this person a lot. Trust is the foundation of a good partnership. If there is a lapse of judgement, you are more likely to forgive and move on because deep down you know the other person has the same goals in mind as you.
You have loyalty.
You’re loyal to each other inside and outside of work, which makes a great foundation for a company. Generally, family members will put more dedication into common goals and show more passion for a family business because it’s also “personal.” Some level of intimacy among business owners can make the company vibe comfortable and automatically provides a built-in support system full of teamwork.
There’s long-term stability.
If it’s a family business, there is less of a chance one of you will want to simply quit because you’re fed up. It provides some long-term stability for your business goals since both of you be more willing to make sacrifices for the sake of the family business.
They know how to pick you up when things go wrong.
If things get tricky, with your business or personally, you know the other person will be there for you no matter what comes your way. You want a stable person who has had experience helping you out before to be your champion when things are hard.
There’s more flexibility.
Because you’re working with family, it’s often easier to work out a flexible schedule that benefits everyone. This can include a part-time schedule, flexible hours, or ability to bring one’s pet to work. Family is generally more understanding and lenient when it comes to work schedules, decisions, judgments, and mistakes.
You would be helping out your family.
Not only does going into business with your family mean that you can provide job opportunities for other family member, it can also let you leave a legacy for generations to come. Being able to offer a position to a family member can help enrich your relationship with that person. The possibility of leaving a viable business and profitable enterprise for your heirs can be a rewarding thought as well.
Cons of a Family Venture
You may have different future goals.
This can include the business layout as well as future goals: will you eventually want to expand, become acquired, or keep it in the family from generation to generation? David Ransburg, a consultant with The Family Business Consulting Group, Inc says that a huge problem when going into business with family is not having the same goals for the business. If you don’t share goals for the future, it will be hard to come to a consensus about business decisions.
Personal relationships can cloud judgment.
Were you were sitting on a deck drinking beers when you both thought, this person would be so fun to go into business with? Just because you have a great personal relationship does not mean that person will be a good business partner. Often the distinction becomes a blurry line. Think about your family member’s credentials, level of commitment, and qualifications. Evaluate them just as you would any other potential business partner. It might be a good idea to make a job description with specific qualification requirements to make sure your family member meets them.
Disagreements can become personal.
You’re going into business so of course, conflicts will arise. This can be made very challenging when you’re working with a family member because personal relationship can get mixed up with business relationship. It’s important to take personal feelings out of disagreements and focus on what’s best for the company, according to Ira Bryck, Director of the UMass Family Business Center.
You may have differing ideas on risk.
You may be ready to take the plunge into expansion while you’re family member may not be. It’s important to be in sync on big decisions like product expansion, new marketing ideas, or hiring new personnel. It’s fine to disagree sometimes, but generally, you want to approach business the same way as your partner.
It’s challenging to keep personal and professional lives separate.
Boundaries between personal and professional lives are inevitably going to blur when you have both relationships with a person. It can help to establish rules like not discussing work at home or to only talk about personal things while not at work. It’s also important to not drag past personal experiences into work arguments. Maybe your husband is lazy about doing the dishes at home, but that does not mean his late report is due to the same laziness too. Or maybe your father is the “boss” at home, but in the business the son might be the boss. It’s important to respect one’s role in the business and not bring personal matters into the workplace as it can affect productivity and relationships with clients.
What happens if you want to move on?
It’s possible that someday you might want to move on with your career, but being in business with a family member can make that hard. Leaving might pose a risk to your personal relationship. Also, consider what might happen if your partner dies, becomes sick, or divorces you. What happens if either of you exit? Who will take over responsibilities? Will this harm your personal relationship too much? Will this ruin your business?
If you can, a beta test might be ideal to try out a family partnership, suggests Melinda Emerson, author of Become Your Own Boss in 12 Months: A Month-by-Month Guide to a Business that Works. Testing the relationship can show you how your partner approaches projects, works with you on business matters, and what skills they bring to the company. A beta test will give you insight in how it might work before committing all your capital and energy to your business endeavor.