Pros Cons of a Family Business
Pros Cons of a Family Business
It’s definitely a close business relationship. Twin sisters born just nine minutes apart, the pair grew up learning how to share and work together. “We make an excellent team because we know each other's strengths and weakness so well,” says Fiona Lees.
Called Balmshell by Jenny & Fi, their start-up cosmetics company offers ten “smoochable” lip-gloss colours in a unique packaging design.
Balmshell ( www.balmshell.com) is a perfect play on words for the company, given its lip-covering products and blonde directors. “We came up with the idea because we’re self-confessed lip gloss junkies, and saw market opportunity for a fun, high-quality product,” comments Fiona.
When it comes to working with family, Fiona says benefits include a very reliable business partner. “We enjoy a very close relationship and have developed a deep bond since we were born. As a business partner, I know Jen will be there during the good and bad times.”
However, entrepreneurs should go into business with family for the right reasons. “Don’t start a business together just because you’re family,” cautions Fiona. “Do it because you work well together on a professional level.”
Jen recommends family business partners take care of the downside early. “Work out all the tough issues before you start your business,” she recommends. “Clearly define each person’s roles, duties and investment then hire a lawyer to draw up a partnership agreement.”
To help separate business from pleasure, Jen suggests family business partners set some boundaries. “For instance, you may decide not to talk shop at the family dinner table,” she says.
Passionate about starting their business, the sisters realized the importance of securing family support in case plans – or partners – don’t work out. “As our best critics and greatest fans, our family keeps us both motivated yet realistic,” comments Fiona. “Overall, they think it’s terrific we’re in this business together.”
Family business needs ground rules
Starting a business with a family member may be a dream come true or become your worst nightmare. Like any business partnership, it’s important to consider all of the issues:
* Dissolving or selling the business. Decide now what will happen if one or both partners want out, then hire a lawyer to draft the agreement.
* Future plans. Work together to create a clear Business Plan to ensure all family partners pursue set goals.
* Chain of command. Someone should ultimately be in charge of certain business decisions, especially if you hire employees. Figure out who’s doing what to avoid confusion.
* Separating family from business. Set some boundaries such as “no shop talk at family functions.” Such rules will help preserve your personal and business relationship.
* Increased financial risk. Whether your team is husband-and-wife, father-and-son or sister-and-brother, you’ll both depend on one business to generate a living. Perhaps one partner should keep outside employment until your new venture can generate two incomes.
* The next generation. Passing the business torch to children can become messy. Hire a Succession Planning Consultant to work out issues such as purchase price, transferring assets and transitioning day-to-day business management.
Whatever your business arrangement, remember that “good paper makes good friends” and write it up in a legal partnership agreement.
Pros Cons of a Family Business - To learn more about this author, visit Roger Pierce's Website.
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While some entrepreneurs prefer to separate business from personal life, Jennifer and Fiona Lees are happily mixing it together.
It’s definitely a close business relationship. Twin sisters born just nine minutes apart, the pair grew up learning how to share and work together. “We make an excellent team because we know each other's strengths and weakness so well,” says Fiona Lees.
Called Balmshell by Jenny & Fi, their start-up cosmetics company offers ten “smoochable” lip-gloss colours in a unique packaging design.
Balmshell ( www.balmshell.com) is a perfect play on words for the company, given its lip-covering products and blonde directors. “We came up with the idea because we’re self-confessed lip gloss junkies, and saw market opportunity for a fun, high-quality product,” comments Fiona.
When it comes to working with family, Fiona says benefits include a very reliable business partner. “We enjoy a very close relationship and have developed a deep bond since we were born. As a business partner, I know Jen will be there during the good and bad times.”
However, entrepreneurs should go into business with family for the right reasons. “Don’t start a business together just because you’re family,” cautions Fiona. “Do it because you work well together on a professional level.”
Jen recommends family business partners take care of the downside early. “Work out all the tough issues before you start your business,” she recommends. “Clearly define each person’s roles, duties and investment then hire a lawyer to draw up a partnership agreement.”
To help separate business from pleasure, Jen suggests family business partners set some boundaries. “For instance, you may decide not to talk shop at the family dinner table,” she says.
Passionate about starting their business, the sisters realized the importance of securing family support in case plans – or partners – don’t work out. “As our best critics and greatest fans, our family keeps us both motivated yet realistic,” comments Fiona. “Overall, they think it’s terrific we’re in this business together.”
Family business needs ground rules
Starting a business with a family member may be a dream come true or become your worst nightmare. Like any business partnership, it’s important to consider all of the issues:
* Dissolving or selling the business. Decide now what will happen if one or both partners want out, then hire a lawyer to draft the agreement.
* Future plans. Work together to create a clear Business Plan to ensure all family partners pursue set goals.
* Chain of command. Someone should ultimately be in charge of certain business decisions, especially if you hire employees. Figure out who’s doing what to avoid confusion.
* Separating family from business. Set some boundaries such as “no shop talk at family functions.” Such rules will help preserve your personal and business relationship.
* Increased financial risk. Whether your team is husband-and-wife, father-and-son or sister-and-brother, you’ll both depend on one business to generate a living. Perhaps one partner should keep outside employment until your new venture can generate two incomes.
* The next generation. Passing the business torch to children can become messy. Hire a Succession Planning Consultant to work out issues such as purchase price, transferring assets and transitioning day-to-day business management.
Whatever your business arrangement, remember that “good paper makes good friends” and write it up in a legal partnership agreement.
Pros Cons of a Family Business - To learn more about this author, visit Roger Pierce's Website.
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