Family Business
Family Business
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.
Family Business - To learn more about this author, visit Jim Bouchard's Website.
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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.
Family Business - To learn more about this author, visit Jim Bouchard's Website.
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