Starting out a business as a family venture can be a really exciting prospect. You already have an established relationship with people who are invested in your success and are unlikely, in theory, to leave you in the lurch!
That said, there may be a couple of things you need to be mindful of when thinking about starting a business with your family.
If you’re willing to go into business with a family member, it’s fair to assume you’ll have a positive relationship with them. But one of the biggest pitfalls to avoid is the problem of objectivity and professional distance.
You need to be capable of making a fair and reasonable assessment of your family members strengths and weaknesses. This can be especially tricky when your family member is not aware of their own limitations. It’s much harder to tell a family member they are not suitable to run the business accounting than an employee.
Before you begin the process of going into business with family, establish very early on that this is a business relationship first and foremost. All decisions, critiques, and directions need to be taken on the assumption that it is best for the business.
If everyone agrees to be on board with this idea, all subsequent discussions regarding what directions to take the business in will be done on this basis. Similarly, the decision as to who is responsible for what can be made secure in the knowledge that you both want the same thing.
No matter how you many family members you include in the venture, it’s important that you establish early on where each of your responsibilities start and end. Have this written down and agreed upon by all relevant members before you embark on your joint venture.
Will some members simply be angel investors? Will some be managing accounts and payroll? Will anyone actually be working on site?
For example, opening a restaurant will always be more successful if it is clear who has final say of what goes on the menu and who will be in control of front of house and reservations!
If needed, you can revise this document later if circumstances change. However, having the original framework of responsibilities and rolls established early in the process will help set professional boundaries in what has previously been a close personal relationship.
Purposefully or not, family members unconsciously carry a lot of bias’s and perceptions of each other that are not necessarily relevant to their professional strengths and abilities. As an example, just because the oldest brother made the decisions when you were young doesn’t mean he necessarily had the best business acumen.
Remember: establish your professional personas early and deal only with this in all your business discussions.
Get multiple perspectives
It’s excellent to have people who you trust, who know you and have a vested interest in your success beyond the profit of the business. Having that kind of support system is a huge advantage and can take some of the strain off your shoulders. This is one of the primary draws of going into business with family.
The flipside to this is that oftentimes a family’s perspective can suffer from tunnel vision. It’s possible you can end up in a sort of echo chamber, reinforcing each other’s ideas and perspective without challenging them appropriately.
For this kind of thing, it’s vitally important you get outside advisors involved. Get other investors or board members who are outside the family to provide a check and balance to your strategies.
All that said…
If you have all of these things in place, going into business with family can have considerable advantages. You’ll have people in your team that know you, that are invested in your well-being and will likely be as committed to the success of the business as you.
You don’t need to vet them, and you don’t need to put on as much of a mask in front of them as you would otherwise. You can show a little more vulnerability and rely on their support and trust. That’s a huge advantage, especially if this is your first business venture.
By Jo Thornley, Head of Brand and Partnerships at BusinessesForSale.com