When starting a business, you might ask yourself: Should I go into business with family? One of the ways to create a successful business is by joining together with family members to create a family business. Some of the benefits of working with family include pooling resources together and creating entrepreneurship opportunities for family members, which can also be passed down to later generations. On the other hand, as with other working relationships, you need to carefully consider who you choose to work with and establish rules for working together in order to avoid conflict. Here are some things to consider.
Should I Go Into Business with Family?
Have a Discussion
The first step in effectively forming a family business is to have a detailed discussion with the family members you want to work with about what you want the business to look like. There are many things to consider about how the business will operate and about the role that each family member will play in the business. So it’s helpful to create a document that outlines all the details and go through it together.
Determine Business Ownership
Determine the percentage that each family member will own of the company and what they will be allowed to take in the event that they leave the business or if the business closes. The amount that each family member receives can depend on factors such as the amount of work or resources that they contribute to the company. Also, create an exit plan for selling the business.
Create a Written Agreement
When making any business agreement with someone, it’s important to get things in writing. This includes doing business with family members. To avoid disagreements in the future, it’s essential to write down details such as the responsibilities of each family member in the business, compensation, who owns what part of the business, and what procedures you will follow if someone gets ill, wants to take a vacation, or wants to exit the business. Creating a business plan and operations manual can also help to avoid conflict. Also, detail how disagreements will be resolved in the event that family members cannot agree on an issue.
Maintain a Professional Business Relationship
Although it is tempting to treat family members differently than regular employees, to maintain a professional working relationship and environment, it is best to treat family members as you would treat others working at the company. This way, your personal family relationships or judgements will not interfere with the operations of your business.
Get Professional Guidance
A neutral, unbiased third party, such as a coach, can help you with forming agreements, resolving disagreements, and preventing conflicts from arising in your family business. Get in touch today!