Thinking about starting a business with family? Don’t be too quick to jump into it before you know all the facts. For some businesses, family ties are the reason for their success, but for others, it’s the reason for their speedy failure. No matter what combination of family involvement you’re planning to pursue, there are several things you’ll want to consider first.
Here are some of the major pros and cons of starting a family business.
Pro: Employee Loyalty
Perhaps one of the most valuable aspects of starting a family business is the built-in brand loyalty from your employees. Most family employees are inherently invested in your brand and the success of the business, which makes them the best employees around. They’re more willing to make sacrifices for the business, put their best foot forward in sticky situations, create long-term stability, emulate shared values, and delineate a certain element of trust.
Con: The Three D’s
You probably don’t want to think about it, but the three D’s (disability, death, and divorce) can derail your entire operation. There’s no room in a startup for someone to suddenly leave, and these unforeseen circumstances can leave a business crippled. It might be awkward, but when starting a business with family, you’ll want to discuss these possibilities with all involved family members to create a plan of action to protect all parties, should one of the three D’s occur.
Pro: Opportunities for Family to Get Started
There are usually more important things in life than running a successful business, and raising a family with plenty of opportunity and growth is one of them. Your little family business could be the key to boosting your children’s, cousins’, grandchildren’s, and other kin’s chances of achieving their dreams. It could create a solid foundation that will develop a lasting legacy for your family and descendants.
Con: Possible Inadequacies
There’s always the risk that your family employees or partners won’t be cut out for the job. You want to offer the opportunity to work and grow with your company, but they don’t have the talent, skill, or drive to accomplish the task. Then you’re faced with the problem of creating family rifts by firing the inadequate employees or working overtime to correct their mistakes.
When you go into business with family, there tends to be more leniency and forgiveness for your mistakes, work-related decisions, work schedules, and snap judgments. There’s also more flexibility when working with either part or full-time schedules, which allows you to work around your family’s extra curricular commitments.
Con: Sudden Conflict
Drama tends to run in the family, bringing up more challenges than you may have anticipated. From major things like succession of management to minor things like working out schedule conflicts, relationship difficulties and even deterioration could be in your future.
Pro: A Lasting Legacy
The thought of leaving your heirs with a tangible business that will continue to bring in money is very appealing to many business owners, not to mention the prestige of owning a family business can carry on for generations. The possibility of a lasting legacy can be a formidable incentive for entrepreneurs seeking motivation to power through the startup phase of their businesses.
Con: Taking Advantage
Some family employees recognize the flexibility within a family business and seek to exploit it for their own means. They might arrive late for their shifts, fail to perform a job adequately, or even take money from the cash register because they don’t fear repercussions from their employer. This is a major concern to watch out for when beginning the journey to a successful family business.
Pro: Customers Love Family Businesses
It’s true that a growing number of customers are turning to big box businesses and chains for their goods and services, but a solid percentage of customers remain fiercely loyal to small, family businesses. They love the good customer service, local ties, and living legacy that come with these establishments. Attaching the words “family owned and operated” to your business is a major selling point for many customers.
Deciding if a family business is right for your business venture is all about comparing the pros and cons and recognizing what you’re getting into with this endeavor. You know your family better than anyone, and only you can decide if beginning this journey will be a rousing success or a booming failure.