When going into business with anyone it is important to make sure that you are acting in your own best interests. But is it harder to secure your position when your business partners are your family?
There are benefits to going into business with your family. You have a certain amount of trust built up and it’s hard to double cross someone who you’ll see at Christmas dinners and family barbecues. However, if that trust gets broken during your business dealings then it can affect both your personal and professional lives and therefore be doubly difficult to deal with.
In order for any business to be successful it needs to be run professionally. All family members must conduct themselves in a professional manner. That means trying to keep a firm distinction between your business lives and your professional lives, and it also means that when you’re in work you need to act like you’re with any group of colleagues. This creates a better impression to clients and non-familial employees.
Part of acting professionally is making sure that you are protected legally in case the business fails, or goes in a direction that you’re not comfortable with. For some people this seems counter-intuitive. Surely the biggest plus to going into business with your family is not having to worry about being treated shoddily. But families can fall out, and if yours does its best that you walk away from this business with what you’re legally entitled to.
While it might make sense to you to cover yourself, you might find it difficult to broach the subject with your loved ones. It might feel like you’re accusing them of not having your best interests at heart, or that you suspect that they may not be honest in their dealings further down the line.
However, the reasons for families needing to cover themselves legally aren’t necessarily malicious. Most of the time it’s not because of acrimonious fallings out, it’s because their life is in flux. If a member of the family committed money to the business, and then needs to withdraw capital or sell their share due to an ill child, it may be difficult to agree what the person is entitled to. This failure to agree may cause bad feeling, whereas if there is a legal agreement written up prior it’s clearer what is supposed to happen if circumstances change. Therefore it acts as a firewall, separating your business and professional lives.