Why You Should Never Do Business With Family
Conducting business is hard enough without the added stress of trying to select trustworthy business partners. And who can you trust more than your own family – the people who love you most and have your best interests at heart?
Doing business with family sounds like the perfect set up, right?
Wrong!
Mixing family business with, eh, business business can get very messy, for a number of reasons. And should things go wrong, there could be irreparable damage to familial relationships.
What you should also remember is that plenty can, and does, go wrong in the world of business and money.
In this article we’ll discuss some of the reasons why you should never, ever do business with family.
They might slack off
Seeing as the stakes are much higher and things are more personal, you’d assume that your family members would be more reliable and pull their weight.
This may not always be the case, though. If you’ve entered into business with one of your siblings who is usually lazy, chances are they’ll twist the dial up on that laziness because they think that, since you’re family, you’ll go easy on them.
Confronting them will be difficult
You don’t want to upset the apple cart, especially not with family, so it can be very difficult to scold one of your family members when they make mistakes.
This is one of the main issues when doing business with relatives. Despite how professional you try to remain, the bottom line is, you’re going to feel uncomfortable reprimanding a family member if they screw up on the job.
Why? Because there’s no way they won’t take it personally.
Issues respecting authority
A boss’s authority is naturally respected by most of their subordinates. But when it’s family? Not so much.
The trouble here is that you might have gone from being the snotty-nosed little brother or sister, to everyone’s boss, and that’s just not something your family members will be able to handle.
So taking orders from you, or you from them, could prove challenging.
You might also find that you question each other’s decisions more than you normally would with non-family members in business, simply because you’re so familiar with each other and know each other’s weaknesses.
The problem with nepotism
What is nepotism?
Nepotism is the act of favoring relatives or friends, especially by giving them jobs. Nepotism can be either positive (e.g., hiring someone because they are a family member) or negative (e.g., refusing to hire qualified candidates who are not related).
Nepotism is a common complaint in the workplace, and it can make for an uncomfortable if not hostile work environment.
Working with family involves a degree of nepotism, which could mean that you’re not giving the same opportunities to everyone, and choosing unqualified relatives over more suitable candidates who aren’t related to you.
You also might find yourself favoring certain relatives over others, and that can lead to resentment.
Both of these scenarios could be detrimental to the business overall. You should always aim to hire the best people for the job, not your favorite relative.
All family events become business meetings
If you do business with family, say goodbye to family gatherings! Usually, it’s easy to separate your work life from your social life once you leave the office, but that almost never happens when you work with your family.
You’ll constantly be talking shop, even when you make efforts not to. None of you will be able to help yourselves.
You’re less likely to legalize the arrangement
When entering into a business partnership of any kind, it’s crucial that you put everything in writing. This means having contracts drawn up and signed, detailing what everyone’s roles are within the company, who owns what percentage, that sort of thing.
The trouble with doing business with family members is that many people are loath to get lawyers involved in the beginning, because they rely on the familial trust.
But this is a terrible way to conduct business, and it can actually create bigger problems later, if the business relationship breaks down.
Personal problems filter into the business
We’re only human, so it’s inevitable that if there are issues within the family, they’re going to spill over into the business.
That can get messy, and is probably one of the main reasons why doing business with family is risky.
How can you, for instance, continue working with your brother as though nothing happened after he said something disrespectful about your wife at Christmas? That’s the kind of drama that will follow you to the office and start to destroy the company.
You could end up ruining your relationships
This is a very real danger when doing business with family, and the horror stories are abundant.
Tensions are bound to run high, and as mentioned before, you’ll have trouble separating business from your personal life when your personal life (i.e. family) is in the boardroom with you!
Whether you need to dissolve the partnership, sell your share of the company, fire a relative, or any host of other things, these could and often do have long-lasting negative effects on relationships within the family.
Conclusion
Sometimes family members are the most suitable people to work with, and when things go right, this is probably the easiest, most enjoyable business to run.
It’s the going wrong part that’s an issue. So, in order to protect yourself, at least legally, you should always, always have a contract that everyone agrees to abide by.