Business with relatives: pros and cons

"And they lived happily ever after. And they died in one day.

And with them their other family business went into the world ... "

Is it worth building a business with relatives?

This review, or rather, "cry from the heart", was left on one of our pages in social networks. I quote it, as they say, "without cuts":

So today we are going to talk about the family business. That is, about a joint business that is being built with relatives and family members.

First of all, let's understand the terms.

What is “taking a relative into your business”?

“Taking into your business” is not always “taking as partners”. This can mean “hiring” the staff of the company, entrusting the management of the department, assigning to do this or that work, and so on.

Relatives and business are a fairly broad topic, and today we will talk about one of the aspects, namely, what it is, where a relative is a business partner.

Let's start with motives.

Why does the owner (in this case, it does not even matter - a beginner or an experienced one) take a relative as a partner (co-owner) in his business?

There are actually very different reasons. So,

Trust is key

Confidence! The cornerstone of business in general and joint business in particular. Who, if not my wife (husband, matchmaker, brother), can I entrust a part of my business or (in operational management), for example, a marketing department with a huge budget or inventory control?

Support

Since today I have neither a lot of money, nor the necessary connections, it is much better to develop my business idea and come up with everything from start to finish with a person who will support in difficult times, lend a shoulder, will not give up in trouble, etc. Who, if not a close person, will be ready to support me in everything, at the same time, share the responsibility, being a co-owner.

Money

Of course, I can look for an investor, I can take a loan from a bank, but ... it is much easier to “ask and borrow” from relatives. At the same time, if a relative is taken as a partner-investor, then it will be much more convenient and profitable to negotiate with him. Our people, we are numbered ...

No formalities

Hired employees always need something - vacations, formal registration, job descriptions, a beautiful job title, high salaries, etc. You can always negotiate with your relatives ... And if your relatives are your partners, then - even more so ... Your people ...

Personal reasons

In my practice, there was a case when a well-established business woman took her husband as a business partner so that (attention !!!) "he was in front of our eyes, under supervision."
Being almost round the clock busy in her own successful business, this smartest woman began to worry, "how is he there" and did not think of anything better than to make him a partner! It was a very sad story ...

As you can see, examples can be very different. From the mercantile possessive to the noblest.

In a family business, everything always starts very rosy. No need to rub against each other, no need to follow any formalities ...
Everyone knows, loves, appreciates and respects each other. Everything happens in a family way. From the heart.
We are relatives! We are partners! This is OUR business!

Several months pass, and problems and nuances begin to creep out.

As it turns out:

• co-owner-sister not only can't talk to clients, but also considers his contribution to the joint business to be more significant than you think,

• co-owner brother not only has no idea what "owning a business" is, but also strongly "turns up his nose", claiming to be an executive director, having no experience in managing the company,

• beloved mother, as a business partner, is taking time off from work believing that if she is a business owner, then she has the right to decide for herself what to do and when it is convenient for her,
• uncle begins to "pull" money out of business for his personal needs, even before the company can afford it. He is a co-owner - this is his profit (dividends)!
• cousin, with all his desire and decency, has absolutely no idea what a strategy is, and a dear cousin, being one of the owners of the business, sees herself in the Canary Islands six months later, while you yourself are planning to invest in production ...

What can you do?
Our people…

Important to remember (!)

• That, sympathizing with a relative, better to help him with something else(money, advice, time ...), but do not risk your business and do not take it as a business partner.

• What is the trust in man doesn't make him the professional you need and an effective business partner.

• What your business customers nothing to do with your family.

In short, imagine a situation when you come to the clinic and the surgeon does not know that you need to operate. Will you be greatly comforted by the fact that he is a co-owner of the clinic and the owner's brother?

“So what, - they ask me sometimes, - FAMILY BUSINESS(business with relatives) - is it definitely bad? "

Of course not.

I have been a co-owner of a family business all my adult life and I will never say that this is bad.

It's great if you REALIZE two key, strategically important issues. Only they will help you build a successful joint business with your relatives.

Strategic question 1

A family is a family, and a business is a business, relatives are not chosen, and business partners - you really need to choose.

Imagine that the relative you want to partner with is not your relative, but a potential partner with whom you are negotiating a future joint business.

It is important to ask yourself questions:

• o would this man be mine business partner, if not for a relative

• o why exactly he, what are his strengths and weaknesses why we will be effective and needed for each other

• o why with this partner I can achieve results faster, do much more than myself(our union is 1 + 1 = more than two or less?)

• o am i ready reckon with the opinion of your partner, trust to him not only as a person, but also as a professional

We are ready to perceive your relative not as a relative, but as a business partner - then GREAT! Your choice is deliberate and deliberate.

Strategic question 2

In business and in partnerships, there are laws and regulations that apply, whether your partner is a relative or a stranger.

These rules need to be known and followed.

For example, one of the rules

"Business partners must conclude a written partnership agreement on the start of joint business activities and agree on all strategic issues in the process of business development on paper, that is, WRITTEN."

Are you ready to invite your relative partner to negotiate on paper?
You are not embarrassed, "what will he think of me, maybe he will decide that I do not trust him ...?"

If you are on these two strategically important questions answered with a firm "YES" and determined that you are ready to do deliberate actions, then - Great!

You have a great chance of using all the benefits that partnership and joint business ownership with relatives really gives.

The paradox of the family business is this:

Do you want to build a successful family business and effective partnerships?
Forget that he is a family one!

It has been verified by me personally, by all members of my family (experience in the joint business of my family - for 24 years) and clients who have come to me for 8 years now to conclude a written partnership agreement and build effective relationships with each other.