By Dr Eugene Brink
Going into business with family and friends could seem like the most natural thing to do.
First off, you know and trust them already and these are some of the core elements of any successful business. Your bonds mean that there is more at stake than just losing money or a failed business. Hence the incentive to make sure everybody is equally yoked and shares the load. It is harder to just walk away from such a business than one where familial ties or friendships are not at stake.
But mixing business with pleasure is undoubtedly not as simple as it seems. “Bringing a family member or friend on board as a business partner may seem like a fine idea, but the relationship can prove tricky to navigate ─ or to end, if things don’t go well,” says Jane Porter, guest writer at Entrepreneur.com.
“It’s easy to get into business, but it’s hard to get out,” says Wayne Rivers, president of the Family Business Institute, a consulting firm based in Raleigh, North Carolina.
Ryan Robinson writes at The Balance that if you choose to enter into such a relationship, you should first think long and hard about it.
What, then, are the questions and snags to consider before taking this leap? Experts provide some advice.
One of the primary quandaries is that it could be harder to crack the whip. “If your family member is great at what they do, that will definitely make things in your business run smoother. However, if you need to provide extensive training and guidance or ‘check in’ routinely to make sure they’re not slacking off, the working relationship can become counterproductive,” says Choncé Maddox, an entrepreneur and writer on entrepreneurial affairs.
“If you hired an assistant who wasn’t completing some of their tasks or not giving enough attention to detail, you would most likely feel inclined to bring your concerns to their attention.”
However, she says, if that assistant is a family member, you may be more reluctant to take him or her to task and request he or she work more efficiently since you have a personal relationship with him or her. “You may feel that if you’re too mean or direct or just do not like the confrontation, it could damage the relationship you have and make things awkward.”
Porter says it is therefore important to ascertain what your respective roles will be and draft some rules about the boundaries between your personal and professional lives. A 2010 study of 518 family-owned businesses had shown that the most successful ones made each person’s role in the company clear upfront, says Tracy Shaw, assistant vice-president of business market development at MassMutual Financial Group, which oversaw the FamilyPreneurship study.
“When working with family or close friends, the boundaries between your personal and professional lives are bound to blur. But you can maintain some work-life balance if you establish a few rules. For example, you might agree not to discuss work during family meals or to talk about personal matters at work only in an emergency,” says Porter.
According to Maddox, if you do find it best to work with family, set expectations early and commit to keeping business and personal factors separate so that you can get more done.
Selena Rezvani, a contributor at Forbes.com, says another factor to consider is whether that person is at a stable place in life. Oftentimes people could keep themselves blind to these types of personal failure when it comes to friends and family. “There’s a reason that 60% of employers check a potential employee’s credit score and history.”
How a people handle their own finances may seem like a private matter, but in a business your own bottom line becomes more public, especially between owners, Rezvani says.
Choncé Maddox, 5 January 2017, “Should you go into business with your family?”, https://due.com/blog/go-business-family/.
Jane Porter, 20 February 2013, “10 Questions to Ask Before Family and Friends Become Business Partners”, https://www.entrepreneur.com/article/225613.
Ryan Robinson, 19 November 2018, “14 pros and cons for starting a business with family members”, https://www.thebalancesmb.com/should-you-start-a-business-with-family-4091927.
Selena Rezvani, 13 June 2014, “5 Questions To Ask Before Going Into Business With A Friend”, https://www.forbes.com/sites/work-in-progress/2014/06/13/5-questions-to-ask-before-going-into-business-with-a-friend/#7a13b86014af.