For many entrepreneurs, the decision to go into business with the family can be a difficult one to make. Afterall, working with family members can be frustrating, to say the least. The family hierarchy tends to migrate into the business, relationships are damaged, and the business ultimately suffers. On the other hand, there is typically a higher level of trust, accountability, and pride among family members.
If you’re considering working with family members, be sure to put a solid plan in place. Discuss management styles, financial responsibilities, and legal concerns before signing the dotted line. And while it may be difficult, try to keep your personal feelings and the business separate.
Everyone Has a Role
Of course, it’s all good and well saying “get the family involved,” but what does that mean, exactly? While roles and responsibilities will change as the company grows, a good place to start is to identify the skills that each person will have. If someone is knowledgeable about social media then they can be in charge of your marketing. If another person has a degree in accounting, they should oversee the bookkeeping and financial planning. Make sure you assess everyone’s skills, strengths, and weaknesses. Clearly identify and assign positions within the business, and be sure to come to a consensus. This will help to avoid problems later on down the road.
Investing in the Business
If this is going to be a true family venture, then everyone needs to be equally committed. It can’t be a matter of one person financing the business, while everyone else enjoys the profits. In order for things to be fair, everyone who’s going to have a stake in the company should contribute. To keep things equitable, the contributions should match the profits received. Be sure to get your financial documents prepared by a professional to avoid discrepancies and resentment.
Thinking Long-Term
You’re not just setting up a business as a short-term project. Because of the number of people involved, and the mutual interest in its success, family businesses are usually able to survive much longer. There’s a reason why you see so many signs saying that a family business has been trading for decades. However, while this is a good thing, it does raise a few concerns. If a family member passes away, there can be probate issues. It is highly recommended to have outside legal advice on how to properly (and legally) set up the business.
Adding to the Clan
As in any family, there will be additions and departures such as marriages, divorces, etc. These occurrences should be discussed when forming the business. If one of the siblings marries someone, should the new spouse be invited into the fold? Try to communicate your concerns in a clear and respectful manner. Again, having a plan in place in preparation for these discussions will help minimize frustration and resentment.
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