Tweet

Family Business

Written by: Jim Bouchard

Article Overview: Don’t do it! At least that’s what some experts say. I’m not going to tell you what to do, but here are some issues you want to consider before going into business with family.

Family Business

Don’t do it! At least that’s what some experts say. I’m not going to tell you what to do, but here are some issues you want to consider before going into business with family.

First, last and middle: Get everything in writing! Too often family business starts with trust, and ends with a lack of it! Do the same diligence with a family member as you would with a stranger. Visit your attorney, draw up formal papers and have your business plan, operating plan and exit strategy in place before you enter into a family business.

Many people assume because it’s family that everyone can be trusted. That may be, but there are also complexities related to family business and trust has little to do with it. Each party is still naturally going to want to protect his own interests; taking care of legal business before you start puts all issues on the table. Creating a legal entity with clearly defined roles, responsibilities and liabilities avoids any misunderstanding created because you assume other family members are putting your interests first.

The good thing about a family business is that you know the people you’re in business with.

The bad thing about a family business is you know the people you’re in business with! Family dynamics, patterns of communication and traditional family roles and relationships all play a part in the daily grind. Are you willing to accept the role of a subordinate when your father is carrying his role family role over to the business? Are you willing to work to separate the job from home life when your wife and business partner tells you she’s had enough business for today? If you have unresolved or unhealthy family dynamics in your past trust me, you’ll be visiting them again. Be sure to take the time to consider patterns of family behavior carefully before committing to a family business relationship; it’s very difficult to completely separate family behaviors from business.

If you have strong familial bonds and healthy patterns of communication, family business can run smoothly as a rule. Clearly defining roles and respecting that business roles may differ from family hierarchy will help assure that business is business and family is family.

Money may not really be the root of all evil but it sure can bring out the evil in some people, particularly when times are tough. If you borrow money from family members to start a business make sure the terms are clearly spelled out. What will happen if you cannot meet your obligations? Fighting with a bank or credit card company can be emotional, but anywhere near the magnitude as a conflict with a family member over late payments or default on a loan. What will you do if the family member who loaned you money has an emergency and suddenly needs it?

Without the complications of a family relationship, any of these questions might be simple legal matters. When you’re doing business with family, even small issues can become larger emotional and spiritual conflicts.

A little time with a good attorney and accountant will always save you money and aggravation in business. In family business this investment could save your family! Take the same care you would in doing family business as you would entering a business relationship with anyone; in fact, take a little extra care. After all, it’s family, right?

I am in business with my wife Alex. I truly believe business between spouses has a greater chance of success than business with other family members. You choose your spouse, you don’t choose blood relatives. Hopefully you’ve chosen a spouse who compliments your talents and abilities. Hopefully you’ve developed open and healthy methods of communicating. A healthy personal relationship can lead naturally to a healthy business relationship. I truly enjoy being in business with my wife; it allows us time together, we’re working jointly toward our success and happiness and it allows us a great deal of personal freedom.

Still, it’s important to clearly define business roles and get business arrangements on paper. As much as you might not like to think about it, you should also plan an exit strategy. Good marriages do sometimes turn bad, and like taxes, death is at some point a certainty. What happens in case of illness or injury? Do you want to continue the business if something happens to your spouse? As painful as it is to think and talk about these things, contingency plans made long in advance can prevent unnecessary stress in times of loss or sorrow.

As I said, other than your spouse you don’t choose your family…

I’ve done business with family. Other than with a spouse, I don’t recommend it! If you choose to go that route, make sure you pay close attention to the word “family” in “family business.” Take care of business and ultimately, you’ll be in a better position to take care of family.

Related Articles
  RULE YOUR BUSINESS LIKE A SHINE STAR
  3 TIPS TO HELP YOU PAY ATTENTION TO YOUR CUSTOMERS THIS CHRISTMAS SEASON
  3 Primary Reason to Become An Entrepreneur
  FACTS YOU NEED TO KNOW WHY MASTERMIND GROUPS ARE VERY IMPORTANT TO ENTREPRENEURS.
  Adopt an Emotion: PEACE

Article Tags: business partner, business plan, complexities, diligence, exit strategy, familial bonds, family behavior, family behaviors, family business relationship, family dynamics, family member, family members, legal business, legal entity, liabilities, misunderstanding, patterns of communication, stranger, subordinate, traditional family roles



Related Forum Posts
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Re: Kevin. What happened to all others moderators? - Hi Carol, It's good to see you back. Family comes first. Take your time.
Re: I thought social sites were a waste of time. How wrong I was - Social Media has only really been understood this last year or two. Before that I didn’t really understand or like Facebook for example because of the problems separating Family and Friends from Business. Twitter seemed a total waste of my time and a lot of people seemed to spend all their time building up their followers to brag about how many they have got. Now I understand the basics a bit more I can appreciate the value particularly of Twitter in building up relationships with others in your niche with a view to doing business later. If people follow me and are active in the general Internet world or marketing in particularly then I follow back immediately otherwise I don’t see the point. You could argue I suppose that someone who breeds dogs and enjoys painting for example might suddenly become an Internet Marketer and I am missing out on not following them but I tend to stick within my niche. regards, Mal.
Exclusive: Interview with Results - Hi Forum Members, I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles). As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business. This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business. I am looking to interview about 30 businesses across North America over the span of 3 months. At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews. I would like to extend this opportunity to members of the Forum. If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM. Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
Re: POLL: What one thing... - Family and friends support is very important, especially at the beginning when it's hard. I didn't have any support, until my family saw the first check and since then I have all the support I need.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Ways to Improve Your Landing Page Conversions

BUILDING A HIGH PERFORMING TEAM

How to Write Your Articles for Better SEO

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.