Should you go into business with friends or family?
For as many horror stories as there are about feuds and fall outs, there are just as many positive case studies that show how being in business can strengthen a relationship between you and your loved ones.
What are the benefits and what are the pitfalls?
For the purpose of this article, we’ll class friends and family as one unit (F&F), against the premise of going into business with an investor or someone in your network—put simply, people you know very well versus those you know hardly at all.
The pros of being in business with F&F include the fact that you know each other well. You’ll know when the other is feeling down, angry, sad, tired…there will be less guesswork and the familiarity to be able to ask if something is wrong. You’ll likely have similar tastes and/or a shared history. Your networks will involve the same people who will all be rooting for the both of you to do well.
There will be no awkwardness or uncomfortable silences, and your focus can be on the business as opposed to getting to know one another.
Give and take
This same familiarity can be a plus in a working relationship, particularly between husband-and-wife partnerships. Most successful personal relationships are good at giving and taking and knowing when to do which. A good working relationship needs give and take, too.
If you were to seek funding, you’d have to show that your business has a solid base; your passion wouldn’t get you very far. Though successful businesses shouldn’t be built on pipe dreams, it’s much easier to get your partner on side during decision-making if they’re F&F. They’ll be able to fully understand what something means to you, and they will trust your judgement far more than someone sat in a bank who’s never met you before.
Because they know you well, they may also save you from making mistakes. No business owner knows everything, and F&F are more likely to speak out if they believe you’re about to drop a clanger than someone who isn’t that close to you; the latter may not feel able to broach the subject if they don’t know you that well.
In business, it can often be good to be challenged when it comes to strategy and thinking, and someone who can be objective about the plans and actions relating to your business. If you just have a ‘yes man’ beside you, who goes along with everything you say because they’re your most ardent supporter, it may do more harm than good.
It’s more likely that someone who isn’t F&F will bring a different skillset, lived experience and network of contacts to the table, all of which are good things for a business.
If your business partner is also F&F, you will likely see them outside of work in social settings/family life. The lines between home and work may become blurred as a result. You don’t want to be talking shop when you’ve left work for the night, nor planning your business’s marketing strategy during your grandpa’s wake. Having a little distance from one another, in this regard, can be a good thing and keep everything on one level.
If you and your F&F business partner are pooling everything you both have into the new business, not only could your bank accounts go pear-shaped if the business fails, your friendship could go the same way, too. There could be blaming and shaming, and should the worst happen, you’d be faced with the feeling of failure every time you saw each other, as there’s be no clean break.
Should your F&F lose their life savings, you’d have a first-row seat for the fallout. It’s an incredible responsibility.
Emotions vs. cold, hard facts
It’s easy to be business-like and professional with a partner who you respect and work with, but it’s more difficult within someone you’ve known most of your life. Emotions can make it harder to give criticism or assign specific roles within the business. Someone who doesn’t have an emotional tie to you will be able to focus on the cold, hard facts of a situation.
Only you can know if going into business with your F&F is a good idea. What I would say is, think about the difficult situations that can crop up within the workplace or which can arise from running a business. Would you be able to deal with them better or worse if you were to experience them with someone you only knew as a colleague?
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