I have been in business for 22 years (I opened my first company when I was 19). And quite successful and profitable work and worked everywhere, if it were not for a couple of “small” “BUT”.
Because of my ignorance, I first lost a relationship with my sister (her husband was my first business partner). Then with my second partner. Then with a friend. Then with my father and mother (she “pawned off” my father as a partner in the firm when he lost his job). To all these people I left a working business that fell apart after I “left”.
Behind my back experience in opening six firms. Auto trading, tourism, real estate, advertising. But everywhere, as soon as development began – failure. Failure because of the inability to build a partnership. I left everything and went away. I “earned” myself several nervous breakdowns. I couldn’t learn anything from the experience.
And now I had a new crisis with a new partner, which has already affected my marital relationship with my spouse. What to do now?”
So today we’re going to talk about the family business. That is, a joint business that is built with relatives and family members.
First of all, let’s get the terms straight.
What is “taking a relative into your business”?
“Taking on your business” does not always mean “taking on a partner.” It can mean “taking a job” on the staff of a company, entrusting the management of a department, assigning a job, and so on.
Relatives and business is a fairly broad topic, and today we are going to talk about one aspect of it, namely, what is a business with a partner, where the business partner is a relative.
Sometimes you have to run everything together with your family, like the royal family of Monaco does. In such situations, you will need to adapt to the weaknesses of your relatives and use their key qualities.
Let’s start with the motives.
Why does the owner (in this case, it doesn’t even matter if he is a novice or an experienced one) take a relative as a partner (co-owner) in his business?
Actually, there are very different reasons. So,
The main thing – trust.
Trust! The cornerstone of business in general and joint business, in particular. Whom, if not my wife (husband, brother-in-law, brother) can I trust a part of my business or (in operational management), for example, the marketing department with a huge budget or inventory control?
Since I don’t have a lot of money or the right connections today, developing my business idea and coming up with everything from start to finish is much better with someone who will support me in a difficult time, give me a shoulder to lean on, won’t leave me in trouble, etc. Who better than someone close to me will be willing to support me in everything, while sharing the responsibility of being a co-owner.
I can certainly look for an investor, I can take a loan from a bank, but… it’s much easier to “ask and borrow” from relatives. At the same time, if you take a relative as a partner-investor, it will be much more convenient and profitable to negotiate with him. Our own people, we’ll settle for each other…
Lack of formalities
Hired employees are always something you need – vacation, official registration, job description, a beautiful job title, high salary, etc. With relatives can always be negotiated … And if the relatives are your partners – even more so … own people …
In my practice, I met a case where quite an established businesswoman took her husband as a partner in the business in order to (attention!!!) “he was on the eyes, under supervision”.
Being almost 24/7 busy in her own successful business, this smartest woman began to worry about “how he was doing” and came up with nothing better than to make him a partner! It was a very sad story…
As you can see, the examples can vary widely. From the mercantile and possessive to the noblest.
In the family business, things always start out very rosy. You don’t have to get on with each other, you don’t have to have any formalities…
Everyone knows each other, loves, appreciates and respects each other. Everything happens in a family way. From the heart.
We are relatives! We are partners! This is OUR business!
A few months go by, and the problems and nuances start to come out.
As it turns out:
Not only does the sibling co-owner not know how to talk to customers, but he thinks his contribution to the joint business is more substantial than you think,
the brother-owner not only has no idea what it means to “own a business,” but also has a very “cocky” attitude, claiming the role of CEO, without any experience in running a company,
a beloved mother, as a business partner, slacks off, believing that if she is a business owner, she has the right to decide for herself what to do and when it is convenient for her,
the native uncle starts “pulling” money out of the business for his personal needs, even before the company can afford it. He’s the co-owner – it’s his profits (dividends)!
A cousin, with all his desire and decency, has absolutely no idea what strategy is, and a nice cousin, who is one of the business owners, sees himself in six months on the Canaries, while you yourself are planning to invest in production…
What will you do?
It is important to remember
- That when you sympathize with a relative, it is better to help him with something else (money, advice, time…), but not to risk your business and not to take him as a business partner.
- That trust in the person does not make him the professional you need and an effective business partner.
- That the customers of your business don’t care about your family.
- In short, imagine a situation where you come to the clinic and the surgeon doesn’t know what you need to operate on. How much comfort will you get from the fact that he is a part-owner of the clinic and a brother-in-law of the owner?
If you’re willing to make an informed decision, then great!
You have a great chance of taking advantage of all the benefits that a partnership and joint ownership of a business with relatives really brings.