Start a business with your family?

Posted on June 28, 2008

One of the questions you should answer before starting a business without outside investment is where to find workforce willing to work at least for a period without having huge financial demands. You simply don’t have the money to pay for employees in the beginning, so you will have to look elsewhere.

Most likely you will first look at your family and friends - they could be helping you at least for a while, until you make enough money to hire on the open market. But is that good or bad?

In my case, when I founded my company, I’ve started it with my girlfriend and her sister for 2 reasons: we seemed to be doing a very complete team (my girlfriend is a PR specialist, her sister a designer and I was doing a bit of coding and taking care of the legal stuff). And the second, we all where available to work with little or no payment, at least in the beginning.

But was that good in the end? It’s hard to say. We did things that we couldn’t have done if we weren’t “family”, but it also prevented us doing other things that we could have done with regular employees. There are at least a few items that are different when working with family or friends:

The bad parts when starting a business with your family:

  • it’s very hard to impose a decision. You will basically ending up being more bosses for the same thing and it’s very hard for one person to decide something and the others to follow. Because there are no hierarchies.
  • Normally, as a company owner having regular employees, you don’t have to worry so much about the profit. Of course you do, but you don’t have to discuss this with all your “employees”.
  • When things go wrong, it’s hard to blame, and it’s even harder to correct things. Things get personal most of the time

The good parts when starting a business with your family:

  • No matter if you are away, there is always somebody from your family keeping a careful eye on what’s going on with the business. The level of trust is higher
  • You could ask your family to do things that a regular employee wouldn’t do. Like staying up all night to finish something. Or spending a weekend for a project.
  • If it goes well, it goes well for all your family.

I’ve found an interesting article written by Small Business Diva (Donna-Marie Coggins) that talks about Hiring Friends Or Relatives. I will comment on that:

  • Strong Personal Relationships Are Not Guarantees Of Compatible Working Relationships. Agreed, as I soon found out after founding my company, all 3 of us had very distinctive business approaches. Starting from different goals and up to the way we worked with the customers.
  • Strong Personal Relationships Are Not Guarantees Of Compatible Working Relationships. Something else that is crucial to consider is how well suited or qualified your friend or family member is for the position he or she will hold. Being a nice person or a deserving person does not make you qualified for a job. Agree as well, having somebody on board that is not qualified will greatly negatively influence the other “regular” employees and the overall outcome.
  • Preventing And Managing Disagreements And Difficulties. If you are entering into a business partnership with friends or family, you must clearly define the relationship, roles, and responsibilities ahead of time. As mentioned by me earlier, this is probably one of the most difficult things when working with your family.

Here is the rest of the article: Should You Hire Friends Or Relatives?

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Comments

4 Responses to “Start a business with your family?”

  1. MorganLighter on June 29th, 2008 3:48 pm

    It’s been my experience that the only relative that one should go into business with is one’s spouse. If the marriage is a great one then the business has a higher chance of succeeding.

  2. Donna-Marie on July 3rd, 2008 3:13 am

    You’ve raised some great points here. I have been in business with several family members, firstly as an employee and in recent years as the employer. I’ve yet to venture into a partnership with friends or family.

    All of my experiences with working with family members have been generally positive however we always had very clear boundaries set right from the beginning. I believe that’s one of the keys.

  3. Mike Michalowicz (I'm a TPE) on July 11th, 2008 9:16 pm

    I disagree with MorganLighter. There is NO relative you should go into business with, and that includes a spouse. If you work with a spouse it is work all the time, even when you get home and you need a break at some point.

    - Mike

  4. admin on July 12th, 2008 9:50 pm

    Well Morgan,

    Actually I have to agree with Mike, your spouse it’s exactly the only person with whom never enter a business relationship. Who’s going to lead the business?

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