It may seem like a great idea to start a business with family members. You, your partner or parents, as well as your child or other family member, could all benefit from the venture. Is it the best way to start your own business, though?
Combining personal and professional life can be rewarding or problematic, depending on what type of business you run, who you work with and how you split responsibilities and income.
Before starting a family business , you should consider the pros and cons.
The Key Takeaways
- You can create a supportive work environment by working with family members, as you already have a relationship of trust with the people you work with.
- It can be difficult to separate family and work life when you run a family business.
- In times of crisis, a family that relies on one income source can be at risk.
- Consider your personal situation before starting a business for the family.
How to Start a Small Business with Family
The idea of establishing a family business is appealing to entrepreneurs for many reasons. You’re likely to know and trust your co-workers, the money stays within the family, and the business could be passed down. A family business is a wonderful way to leave a legacy for future generations, but it’s not easy.
As a family-run business, you may face a variety of challenges. These range from workplace conflicts to family dynamics. We interviewed several online and brick-and mortar family businesses to get a better understanding of the pros and cons.
The Pros and Cons to Starting a Family Business
Pros
- Your business partners are trustworthy
- You know each other’s strengths as well as weaknesses
- Working with your family
- Money stays in the Family
- Traditions can be maintained
You can also find out more about Cons
- Personal conflicts can disrupt business
- No Personal Time Off
- Too much leniency can result from fewer rules
- Lack of new ideas
- One revenue stream
Pros Explained
You Trust Your Business Partners
You don’t need to micromanage because there is already a trust established. This is essential for some businesses.
In an email interview with The Balance, Jeff Moriarty of Indiana’s family-owned business Moriarty’s Gem Art said: “We sell jewelry and gemstones worth tens of thousand dollars. Trust is important.”
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It creates an environment where you can openly talk about challenges and make difficult decisions.
You may also feel more confident to take risks, knowing that your family is there for you. It can create a sense of togetherness and support, which will help you get through the difficult times. Kristin Meyer of Southern Crafted Shutters, in South Carolina told The Balance that building something together allows you to look back on the experience and say “Against all odds, we achieved this together.”
You know each other’s strengths and weaknesses
You may find that working together with your family is the best thing you can do. This is because you understand each other, and are able to compensate for each others’ weaknesses.
If one member excels in math, and the other excels in advertising, then it is easier to divide responsibilities and compensate for the lack of the other, rather than hiring someone for each role. It’s especially helpful when the company is just starting out and you don’t have the budget to hire, train, and retain external workers. This can help you navigate through difficult situations such as when a customer complains. A family member who has good people skills will be able to handle the situation in person, while someone with computer skills will be able to solve any online questions.
George Civiletto, in an email to The Balance, said that “operating a business with people who you know and trust is a great advantage.” Civiletto is a member of his family’s legacy business Tuscany Market & Deli. It has been handed down from one generation to the next since 1918.
Working with your family by your side
Small business ownership and operation takes a great deal of energy and time, and so new entrepreneurs are often forced to spend many hours away from their family. Joe Darragh is the co-founder and owner of Pillar Digital Marketing Agency, a family business. In an email sent to The Balance, he stated that “your loved ones will be by your side throughout the process.”
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It takes a lot to build and grow a business with your family. This may help you to become closer both in and outside of business.
The money stays in the family
Most people start family businesses to keep their money in the family. If you work with people from your family, all members of the household will benefit if the business grows. As the money is coming and going from the same household, salaries can be flexible. This flexibility helps small businesses to navigate the rapidly changing economic environment where income may not be fixed.
You Can Maintain Traditions
You can incorporate your family’s traditions, whether they are a favorite meal to make every year for the holidays or a place to visit every summer.
Heather and Michael Heard are the owners of Ray’s Millpond Café in Georgia. They’re able keep traditions alive that embody Southern culture. The Heards, in an email to The Balance, said that they have been able preserve their family’s seafood tradition for more than 60 years.
Buddy Foy Jr. is another example. He owns two family restaurants that are inspired by the heritage of his family: Chateau On The Lake in New York and Chateau Anna Maria, in Florida. The family wants to create a business they can pass on to their daughters, if desired.
Cons explained
Personal conflicts can disrupt business
Moriarty explained that the biggest problem with working with family members is that you can bring home any disagreements you may have at work. This can sometimes make it difficult to be productive in the workplace. It can be hard to behave professionally in the office or store if you don’t talk to your partner or parents at home.
No Personal Time Off
It’s not always healthy to spend a lot time with your family. Meyer explained that “the business can consume every waking moment.” “For instance, while walking along the beach one weekend, we discussed business strategy!”
Meyer stated that sometimes it is difficult to remove yourself from a business, even if you are not physically present. It can be difficult to take a break if you don’t have rules for personal time.
Leniency could be a result of fewer rules
It’s easy to ignore the rules when you’re with family. If there is no set schedule for everyone to be at the office on a certain day, then it may be easier to let your brother come in every Friday at 11 am. Your family may feel less pressure if they don’t have to worry about being “fired”.
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You could set job expectations and responsibilities for the whole family, just as you would with a regular day job.
The Lack of New Ideas
It is possible to get bored working with the same people each day. Brainstorming sessions may become an echo chamber, with everyone sharing the same ideas. It can be hard to spot blindspots when members of the group share similar views. You should be able to identify when this happens, so that you can invite friends to the discussion to help with a diversity of ideas and opinions.
One Revenue Stream
What happens when the family business fails if everyone is involved? A financial crisis could affect the entire family. Darragh explained that this can cause strains in family relationships. If your spouse is earning a living, it can help you weather the storm.
Even if one member of the family has a separate income from the family business it is important to have a fund for emergencies in the event that the business fails. You should save money wherever you can to pay bills and maintain your home.
FAQs (Frequently Asked Questions)
What are the pros and cons of starting a business together with your family?
It depends on a few factors whether it is a good idea for you to start a family business. To ensure everyone is on the same page, it’s important to have a discussion with the family. Do not start a company just because you desire one. Think about the demand for your service or product, and what might happen if it doesn’t succeed.
How can I start a family business?
Decide on an idea for your family business. Read up on the basic principles of running a business and assign responsibilities to the members. Set concrete goals and decide how you will fund your business. Make sure you have time to complete the important tasks, and then promote your family business once it is ready.
