Going into business with family is natural enough to be commonplace. Whether a multi-generational business passed down over the decades, or a thrilling new start-up born over dinner conversation, there’s something magical about sharing a venture with loved ones – though it can be hard to leave workplace arguments in the workplace.
Indeed, that glib remark about family spats is exactly the reason this article exists. Families are often mercurial, and even with the best of intentions, something small can become a wedge in an otherwise-strong business, family unit or both.
If you’re considering going into business with relatives, you need to make sure everyone is covered and the business protected in the event of the worst-case scenario – even if only so that you can relax, and enjoy the reality of the best-case scenario without worry.
Formalise Agreements:
The first step is perhaps the toughest of the bunch, mainly for the fact that it involves grappling with some less-savoury parts of starting a business. No one goes into business with a relative looking forward to having in-depth discussions about how exactly to split responsibilities and profits – and those conversations can be sticky enough without the family element involved.
Nonetheless, it is crucial that your business is structured correctly – with clearly-outlined roles, clearly-delegated responsibilities, and a formal agreement with respect to the division of profits and decision-making responsibilities. All of this can be described under a partnership agreement – or, if your business is trading through a limited company, a shareholder’s agreement.
Professionalise the Business:
In the formalisation of your business, there are further structural changes you can enshrine that make for a more stable business long-term. One such structural change is actually a requirement of certain formal business structures, including CICs: a board of directors.
Your board can include family and fellow starter-uppers, but can also include independent and voluntary parties, who can act as a hand on the tiller for your otherwise family-led business.
Professionalism also means understanding when to outsource. There are plenty of things that family can solve, but some things should absolutely be left to third parties. Legal matters are some such things, where localised legal guidance from a trusted firm can help you handle business above-board and sustainably.
Payroll is another example, as independent hands minimise the risk of money getting between personal relationships.
Clear Succession Planning:
While instituting this change, you should also take the time to draft up a well-defined succession plan. This would outline the ideal transition of ownership and management in the event of family members retiring – and can also serve as a spark to get younger generations in on the ground floor.
Open Communication:
Lastly, and most importantly of all, you should ensure that every family member in the business has a voice – and that all voices can hear one another. This means establishing regular family meetings, for the discussion of business matters any arising concerns; you can nip issues in the bud quickly, maintaining harmony and ensuring the family business stays as it should – a fun, honest and natural operation.
