- Many people tend to hire family members when starting a business.
- It can be a wise decision, but there are some precautions one should take to maintain peaceful relations when starting and running your business.
- While family is important, you are trying to run a business, and you cannot let feelings get in the way.
Working with family is a common arrangement, but there's much to consider before hiring or going into business with a relative. Business issues are twofold when your business partner or employee is a family member; there are both personal and professional relationships on the line.
Tips for working with family members
If you're confident in the endeavor and willing to take risks, you can practice precautions that will help you avoid conflict. Here are four tips for keeping the peace when working with family.
1. Create and agree on by-laws.
Before you do anything else, sit down with your family and discuss the details of your endeavor. According to Tina Willis, owner of Tina Willis Law, and her husband John Schutz, an HVACR contractor and owner of Marathon Refrigeration, this includes voting powers, shareholder rights, stock value, etc.
The couple, who have both worked with family before, say it's important to communicate extensively, keep track of your agreements, and hire a lawyer to review all corporate documents before embarking. That way, if someone decides to leave, gets sick, gets married, passes away, etc., down the line, you'll be ready for any circumstance.
Often, people assume that family will look out for one another, and they don't need to sign documents and agreements to ensure that; however, that's not always the case. Relationships, even close ones, can sour, particularly when there is money involved. You can avoid this tension by creating and agreeing on bylaws together.
2. Set boundaries.
When you merge family with work, you need to be wary of unjust favoritism, nepotism and family politics getting in the way, said Masterson.
"That's why it's so important to set the terms of the agreement at the onset and even build a succession plan for the future," he said.
Evan Roberts, real estate agent and founder of Dependable Homebuyers, said bringing family conflict into business can harm business. It's best to set boundaries to separate personal issues from professional ones.
3. Treat all workers equally.
An issue that is likely to occur when working with family is unfair treatment of familial workers, whether it's positive or negative.
"In our business, I find that I tend to set higher expectations and be more critical of family members than I am of nonrelative employees," said Roberts. "This could result in an unfair work environment where relatives [are] unable to grow and advance on an equal playing field."
To prevent this type of environment, Roberts stated that each of his family members reports to him through nonrelative employees, who are then able to provide objective evaluations of performance.
"Unlike most anti-nepotism policies, this structure isn't in place to prevent favoritism but instead provides my family members a fair and impartial environment in which to work without the complications of family dynamics interfering with career growth and performance," he said.
However, this type of arrangement can also ensure that family members don't receive special treatment.
4. Maintain a work-family balance.
There's a reason they say, "leave your work at work." Especially when you work with family, you want to make sure that there's a clear line between your work life and our family life. If you don't, you risk losing one or both of those things.
"The toughest part about balancing a work-family relationship can sometimes be making sure you spend nonwork time with your family member-slash-work associate," said Nate Masterson, marketing manager for Maple Holistics. "This is incredibly vital for keeping a family member in the family-first, colleague-second category."
You might want to plan a trip or family gathering a special event, but on a day-to-day basis, Masterson said accomplishing this can be as easy as having lunch together and avoiding any business talk.
"Even if you spend all day together, you still need quality time to remember that family comes first," he said.
What are the pros and cons of working with family members?
There are many positives and negatives to working with members of your family.
There is a sense of comfort and familiarity that comes with working with your family. You know their values and beliefs, and can determine their work ethic before you hire them. You can save resources that you would spend on hiring. You will not have to consume yourself with background checks and interviews. You have a dedicated workforce ready to help you without having to worry about your staff your company. People often associate honesty and trust when you have a family-owned business. Often customers prefer businesses that are family run.
When your family is working for you, it can be difficult to correct behavior or negative attitudes. You may find it challenging to confront your family members when you do not agree with their behavior. It can often be hard to communicate with those who are closest to you. You may want to avoid conflict so that you do not hurt anyone's feelings. When you are more concerned with the feelings of others, it can be hard to run a business. You must remember that you are running a business and be an effective leader. That might mean that you have to fire people when necessary. Many times, a family business can get caught up in doing things the way they have always been. It is often hard for a family business to be innovative and change with the times.