Family Members are not always the best business Partners

It can be dangerous working with family members when starting your own business. So you should consider whether or not you want to start a family business.  Believe me, I know. I was fired by my very own brother several years back. Don’t worry, I deserved it, and he was in the right to do so. Keeping me on in his business would have slowed him down, I wasn’t the right fit.

He had hired me as an assistant swim coach for his team. Mostly because he knew I needed the work at the time. I was qualified. I had been a swim coach before, swam competitively for 13 years, and had just become certified as a personal trainer. But mainly, he knew I needed the work, and being the great brother he is, he hired me.

This is where everything “hit the fan” really. Even though we are brothers we had very different coaching styles, mainly because I had a lot less experience than him, he had matured into his coaching style, I just wasn’t there yet. I was more Bobby Knight, he was, and is, more Phil Jackson. I think he was really surprised by this. He hadn’t seen me in a coaching role before.

It came to his attention the parents were not “into” my style of coaching at that time, they wanted me gone. I am sure it was hard for my brother to bring this up to me. Awkward, painful, weird, but I didn’t blame him for his swift and decisive action. He had a business, and family to take care of. I don’t know if I would have been strong enough to do the same.

Oddly, I didn’t begrudge him one bit. I never thought to myself, “what a jerk”. He wasn’t, he was right. He did the right thing for him, his business, and ultimately his family. Fired. Boom. Done.

Here are 3 things you should do before starting a family business:

1) Have a strong business plan in place.

I am not talking about a long drawn out document stating financial goals of the business (we’ll get to that another time). I am talking about clearly defining what the business is, how it feels, what the culture is of the business. You must define what it is, and more importantly, exactly what it is NOT.

Knowing what the business is, versus what it is NOT, is extremely important. It makes decisions in the future a whole lot easier if you know these things up front. Do we need to order chairs for people to sit in? Nope, we are a carry out only establishment, and we agreed to stay that way until our sales reached  $XXX per year.

 2) Define each persons’ role explicitly

Starting a family business can range from one person running the entire operation while other family members are silent partners, or each of you can take on certain responsibilities of the day to day operations.

This clear definitive agreement upfront allows the family business to run more smoothly and grow from day to day. It also helps keep all parties accountable. Keep in mind that when making these arrangements in the beginning, you should also be able to discuss what happens if these responsibilities cannot be met. Is there a course of action each business partner can take? Is there a hierarchy to decision making? Is there an exit strategy for one, or both family members?

3) Keep extended family at bay

I know this one may sound a bit out there. What I am referring to are the spouses of the family members in the business. If they are not officially a business partner, one that is agreed upon in the beginning. Be firm about what topics they can speak upon. Usually, none of them.

Every once in a while you will get a husband, or wife, that would like to throw their two cents in, well they should’ve ponied up when the business was created, or they can buy in now. Until then, extended family, see you at Christmas. We have business to do.

You will be thanking your lucky stars if you cover just these three things when starting up. There are so many more topics to cover, but I wanted to impress upon you these three.

One last thing, get it all in writing. You’re family now, but when the doors open, you’re business partners as well. You can even use a service like LegalZoom for the basics, better yet, find a lawyer you all can trust.

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