There is a special bond between brothers, sisters, parents, and extended family members. But is it special enough in that you can go into business with them?
Going into business with your family can be a good idea if done right. After all, they are people you like and can trust.
There are of course stories where families have fallen out over business disagreements. But a lot of these situations seem to arise from a lack of communication and unfounded assumptions. There are a number of steps you can take to establish a successful business endeavour with those dear to you. In any event, you should be taking precautions regardless of who you go into business with. But with family, there are some special considerations that can ensure that you have a solid business relationship without forgoing your family bond.
The lack of communication can be an issue for any business deal. When it comes to family, misunderstandings can become personal and strike chords. So it’s best to speak to each other about any issues before they escalate. Don’t make assumptions, and definitely don’t act on those assumptions. Also talk about who is going to do what - perhaps your sister likes marketing, and maybe you want to focus on the sales side of the house. If you sort out a lot of the administrative talks early on, there is likely to be less misunderstandings and contingency plans if one of you is unavailable.
Many business fallouts between families arise out of money and in turn, ownership. If you decide on the ownership up front and put it together on a document, there is less likely to be any issues as you all will be clear with the ownership structure. Also, consider each individuals' capacity. For instance, will you all be involved full-time in the business? Or is there a part-time option? The last thing you want in a family business is an argument over who spent most of the time looking after the business and therefore should receive most of the proceeds.
Your business structure
Come to an understanding about your business structure. The UK has a range of options available including creating a partnership or a limited liability company (LLC). There is also the option of a corporation. Whichever structure you decide, you will need to be mindful of the legal requirements as well as the obligations of the board of directors.
And because of this, you should get the appropriate legal and financial advice from a lawyer and accountant. Whatever you decide, ensure a professional draws up the agreement - don’t do it yourself. Especially within family businesses, it is always better to get a third person to assist with the legalities.
Keep it strictly business
This is easier said than done but the concept is very powerful when implemented correctly. The best way to ensure you maintain a business relationship is to take your personal relationship out of the equation. This means any personal decisions are not discussed in the business environment and all major business matters are resolved away from family gatherings. Of course, there are exceptions but you get the idea.
If you’re considering a business venture with your close ones, by all means, go ahead. When building a business, it is important to do it with someone you can trust and enjoy the company of. And who better than your own family? But as with any business venture, ensure you have the relevant safeguards in place and… communicate with each other!