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Going Into Business With Family: What You Need To Know

Advice from people who've been there, done that: going into business with family

Thinking about going into business with family? Plenty of American's have! Family-owned businesses dominate the American economy, employing over 60% of the workforce and making up 90% of all businesses.

To help you make a decision, we asked small business leaders to share their best advice on working with family.

The Good and The Bad

Before going into business with family you should be fully aware of the potential pros and cons.

On the bright side, family can be a huge support. "The truth is that nobody will care more than family about your business," says Belinda Ginter, Certified Emotional Kinesiologist and BET Mindset Expert for Business. "I worked with my husband in two businesses and it was nothing but positive because when we were in the business we kept it professional and when we went home we agreed to leave the office at the office. I have consulted in businesses where mother-in-laws worked at the reception desk or brothers were partners. When there are strong boundaries, it has been a very positive recipe for growth."

Not to mention, working with family can be fun! David Leonhardt, founder of The Happy Guy Marketing, admits that "the other thing that works really well is office romances – but that might just be because we are a husband and wife [team]."

How to separate work and family when you own a business together

On the other hand, family businesses run mild to severe risks. Work can seep its way into personal time and become all-consuming. Continual lack of boundaries can lead to conflict, fights, and even family estrangements.

"I've seen cases where parents criticize children, spouses fight, and a son will not speak to his father for years. When it comes to conflicts in family businesses, the issues are not easy to resolve. This not only inhibits the growth of the company but also creates a serious rift between family members if the differences are strong enough," reports Martin Luenendonk, Co-Founder & CEO of Cleverism.

"You have to be capable of working well together in the tough times as well as the good," advises Ben Taylor, Founder of the Home Working Club. "If things already tend toward the volatile, adding the complication of a business on top can be really unwise."

Keep reading to learn how to avoid potentially disastrous consequences.

Advice For Working With Family

Set Strong Boundaries Between Work and Personal Time

One of the most consistent pieces of advice is to "keep your personal relationship and business relationship separate." John Moss, CEO of English Blinds, explains, "This is easier said than done, but leaving work at the office – both the good and the bad – is essential to keep the objectivity you need at work, and to ensure that your personal relationship doesn't suffer even when business isn't going well."

At work, family members should be hired based on their qualifications for the job and held to the same standards as any other employee. At home, make sure to spend quality time together and apart. It's OK to create "me time" if you spend the work week with family.

Set Clear Roles, Responsibilities, And Expectations

Set clear roles, responsibilities, and expectations for every family member in the business. This includes agreeing and aligning on the vision beforehand.

"Establishing values at the onset provides a foundation from which to make difficult decisions by putting a decision or problem through the lens of the company values. This provides a grounding in objective criteria rather than allowing emotion to overwhelm the decision-making process," says Carlos Castelan, co-founder of The Navio Group.

Family business 101

Earl White, co-founder of House Heroes, stresses the importance of clear work standards. "I avoid family conflicts by jointly defining each person's role and objectives. In my experience, disputes arise when the work tasks are subjective. Each person has their own perception as to the work that needs to be done and whether it's done well. Objective data limits the emotion with difficult problems."

"For example, my sister's role is to manage customer lead phone calls and convert them into business. We defined the schedule and process for answering and returning calls, as well as metrics to track activities (calls made, leads reached) and results (leads converted into business). We also agreed upon concrete goals and the method for how and when data is collected."

"When I sit down for our monthly meeting, objective data demonstrates on its own whether the agreed upon goals were achieved. There is no "dispute" as to whether the work and result met the shared goals. For the most part, before I even address an issue, my sister has reviewed the data and observed the issues."

Aspects of business that should be clarified and documented include but are not limited to:

  • Job descriptions
  • Key performance indicators (KPIs)
  • Individual and company goals
  • Organizational structure, who answers to who and who has decision-making power
  • Company ownership
  • Profit sharing
  • Expected schedules, time commitments, and work ethic standards

Plan For Unpleasant Realities

Unexpected events can throw family businesses into a tailspin. The damage can be minimized with proper planning.

Deborah Sweeney, CEO of explains that "If you decide to form a partnership, it's wise to establish a written partnership agreement to address the daily roles and responsibilities of each partner and procedures for admitting new partners, partner exits, or partner deaths."

Make sure to get legal counsel involved, as well.

Above All, Remember You're Family First

Starting a business with a spouse, sibling, or parent? Read this first.

"Remember that you are family first," – this is a good reminder from Dacia Flynt of Urban Elements on the true value of entering into a family business. It's about creating something special with the people you love most.

If you communicate well and preserve your personal relationships with healthy boundaries, you can expect to see success and happiness together.

For more small business tips, check out our Label Learning Center. You can also get more perspective on a family business from OnlineLabels customer, Polish Your Parts, a successful bath and body company run by a father and daughter.

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