It sounds magical, doesn’t it? Living your dream with someone you trust, love and enjoy being around. Ditching the 9-5 where you’re surrounded by cubical walls, to sit in your garage with your spouse or sibling to build something all your own.
Not so fast. Before you quit your day job, here are five things you need to know about starting a business with family members.
You need to be in it for the same reasons
If one person wants to create the next big thing in town and the other person just wants an excuse to quit their day job, then the business is a ticking time bomb.
Sitting down and reaching a compromise can make things much easier down the road. Maybe that means one person accepts slower growth and the other kicks their effort up a notch. Either way, starting a business is tough on even the hardest working people. If someone isn’t willing to put in the work, chances are you will fail.
Many successful entrepreneurs will tell you that perfect work life balance doesn’t exist. There will be ebbs and flows of needing to attend to the needs of your business. It’s going into it with realistic expectations that will help.
Communication can actually be harder with a loved one
Your work relationship is only as good as your personal one. And the foundation for good relationships of any kind is open and honest communication.
In business, you’re going to need to be able to offer each other firm critical feedback from time to time about things like performance and ideas. You have to be able to communicate effectively enough to hash it all out and put it into a business plan.
When you know someone on a deep level, it can become more of a challenge. Telling an employee they have a bad idea is much easier than telling your wife, who’s always dreamed of opening a bakery, that her red velvet cupcakes aren’t that good.
Still, business is business. And if you’re not willing to have difficult conversations, then opening a business with family isn’t for you.
Entrepreneurship can mean breaking the family mold
Entrepreneurs come in all shapes and sizes. Often, it’s someone’s life experiences that give them the unique perspective to solve a problem that exists in the market, and in turn create a product or service that people really need.
According to a study from the Kauffman Foundation, people who start a business are usually more educated than their parents. More than half are the first people to ever start a business in their family.
Starting a business is not only scary for the individual starting it—doing something you haven’t really seen done before is stressful—it can cause tension between family members.
It can mean zero personal life
Coupled with the tension of doing something brand new, becoming coworkers with your family can create a dramatic gray area when it comes to who to turn to for support.
Family members are often the first people you turn to when things get stressful. But when your family becomes part of your business, work stress inevitably involves family. It could be strain between partners, or even just the long hours it takes to get a new business up and running.
Gaining coworkers that you love and respect is a benefit of starting a business with a family member—but you lose them as a neutral shoulder to cry on when work gets tough.
It’s worth it to fight through the awkward moments in order to strike a balance between what each family member needs as a person, and what the business needs to succeed. According to a recent Kennesaw State University study, the largest and longest lasting businesses started by families were ones that optimized both profitable business growth and family cohesion.
It can be isolating to non-family team members
If your goal is to grow, that means eventually hiring more people. And eventually even the biggest family can run out of qualified family members to hire. This is a good thing that can sometimes lead to problems.
Being the only non-family person in a company can be isolating and discouraging. Employees can feel like no matter how hard they try, they will never be able to compete.
This mentality is unhealthy, not just for the employee, but for the business. Make sure to take the time to show non-family employees that you value their contributions to the team. Success depends on the whole team.
Author: Catherine J. Byerly covers the secondary annuity market for multiple online sources, including Structuredsettlements.com. She is a graduate of the University of North Florida and has worked in communications for the past five years, working in public radio, a business news print publication, and several digital newsrooms.