Starting a business with a family member can be tricky. It’s not something people are often eager to recommend, and it definitely comes with its own advantages and disadvantages. No one knows the ins and outs better than our Head of Advisory Niran Iswar, who has been in business with his brother Vinay, our Managing Director of Accounting for six years.
Here are his thoughts on what you should consider before making the decision to start a business with a family member.
Make sure you know what you are getting into
People often warn against starting a business with a family member because they are concerned that you will end up ruining the relationship over money. Unfortunately, that can happen sometimes: people who are in business with family members often run into communication issues or they have trouble setting the rules.
“I think there is definitely a personal side and a business side but I also believe that because there is a hundred per cent trust that it’s the best decision you could probably make,” Niran says.
Align your visions
“The biggest challenge for us was to get aligned on our vision,” Niran admits. When he and Vinay were starting out, they quickly learned that while they had their own visions, they weren’t exactly on the same page. However, things started to fall into place when they got those visions aligned. Make sure you settle your differences and find a solution before taking the next step.
Understand each other’s goals and roles
You need to understand what goals you and your family member have in business life as well as in personal life. Know what you want, what your family member wants and what your possible business partners want. If everyone is on the same page and wants the same things, you can get into business together.
Make sure you are on the same page also when it comes to your job descriptions. Understand each other’s roles in the business and be aware of each other’s strengths and weaknesses. When you’re working with a family member, it can be a good idea to have different job descriptions, because it gives you a degree of separation.
“I strongly recommend that you decide who is the leader, so that there’s only one leader in the business”, Niran says.
Have contracts in place
There is probably no need to highlight the importance of contracts. You need to have things like shareholder agreements sorted out. Having it in black and white makes decision-making easier when issues arise, and if you notice that you’re sliding into a grey area, you can always pull out the contract and there should be no hard feelings. In case there comes a time when someone needs to leave the business, having contracts and a clear exit route makes everything easier.
All that being said, keep in mind that in everyday life communication is a contract, too. Don’t overlook its power.
Communication is the key
Being open and honest with each other is vital. If the communication works well, working together with a family member can be quite easy. But if it doesn’t and you get emotional about things, you’ll run into problems. Talk about things instead of just telling each other what to do, ask questions and work together to come to a mutual agreement.
“Communication is the number one thing and if the communication breaks out, then you always have the contract to fall back on”, Niran says.
When issues arise, it’s important to not make it personal but remember that you are having a disagreement because both of you want the best for the business. You may get upset from time to time, but the situation won’t go away and you still need to deal with it. So just make a plan, talk to each other and sort it out.
Keep work and family separated
When you’re in business with a family member, it’s often extremely easy to start talking about work in your free time. It’s not necessarily always a bad thing but it’s important to recognise that sometimes it’s better to leave work-related things at work. It’s not a good thing to be only caught up in work. Working together and making decisions together every day also means that the foundations of the relationship need to be good to start with. Having a good friendship, mutual trust and common goal to reach makes everything easier.
“Never forget what it was like before you went into business”, Niran says.
Look out for the warning signs
Be aware that working with a family member can mean that sometimes you must be able to put your emotions aside. If you find that very hard, it’s best to reconsider. Being on completely different pages and having trouble aligning your visions is another potential red flag. It’s important to align your visions early and make sure you have a common goal. If you find yourself in a situation where you have different ideas and cannot come to an agreement, ask for advice. OneHQ advisors and coaches can help you to align your vision, define your goals and help you to build a business. We have already been through that.
Remember that it’s all about business
Remind yourself that in the end it’s not about working with a family member – it’s about working with good people and operating a business. Whether you work with your brother, mom, friend or random person, you still need to have a business plan, clear goals and clear organisational structure in order to build a successful business. No matter who you work with, the same principles and policies still need to be in place before you start the journey.