Conventional wisdom warns against going into business with family or friends. However, there are numerous examples of highly successful companies that started out as family ventures.
In fact, small and medium businesses are based on partnerships with friends and family, usually because of the financial resources that these people are able to provide. This can work both for – and against – you.
Advantages
Shared financial responsibility – Both profits and (more importantly) operating costs are split between the parties.
Trust – Most people feel that they can trust a close friend or family member more than another businessman or woman.
Commitment – Generally, family members and friends enter a partnership with a strong personal commitment to the company – more so than the average employee. Relatives who think of the company as an extension of their family may be likely to invest more time and effort.
Background knowledge – Prior knowledge of the person’s capabilities and shortcomings enables you to place them in the right position and train them more quickly.
Disadvantages
Work habits – Just because a friend or a family member may seem trustworthy, does not mean that their work habits or ethics will be the same.
Strain on a relationship – Friendships or family relationships can be soured by business disagreements.
Lack of authority – A relative may take advantage of family status, knowing that it is harder for you to fire them when you live under the same roof.
Misunderstandings – Your other employees may see the hiring as nepotism, especially if someone is given a preferred position without having the appropriate skills, experience or training.
External factors – It can be tough to keep personal problems out of the office when you face that person at work. The strain could affect the entire business.
Deciding when and who to hire is not easy, but as long as you do it for the right reasons – to grow your resources and profitability – you are on the right track.
Don’t turn friends into foes
Family figures
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