When an entrepreneur is first setting out to accomplish their dreams of starting a business, many times the key aspects and contacts that are needed may not be available.
So sometimes many entrepreneurs find it easy to turn to friends and family for assistance with their business or accept them as their business partners or investors.
However is doing business with friends and family such a good idea? It has its benefits and it also has many negative aspects that cause a lot of entrepreneurs to avoid entering into business dealings with family.
Some would say that “business is business, friends are friends, and don’t ever mention them both in the same sentence!”
The reason that some individuals choose to never conduct business with friends or family is because when things turn ugly and professional disagreements or conflicts arise, it begins to indirectly deteriorate the personal relationship as well.
I will be very frank, many individuals refuse to conduct business with friends or family because they are flat out crooks and they don’t want their loved ones to become the latest victims of their evil business tactics.
It has been my experience that conducting business with trustworthy family members or close friends that are also savvy and experienced in their respected areas of business, is a very good idea! For one I know the individual personally, so I know how they think, react, what type of character they have and so on.
The shear fact alone that I’m directly acquainted with this person and have an established relationship with them is a positive factor in my eyes. Many of the richest people in the world conduct business with friends and family, this is how they “keep it all in the family” so to say.
Sure many relationships have business to blame for their ultimate death and demise.
However there are tons of successful stories out there from entrepreneurs who created a venture with a childhood friend or sibling, or even yet many young entrepreneurs who eventually went on to experience great success, received their initial start-up capital from their parents as angel, silent or even partnering investors.
If you are thinking of entering into a business relationship with a friend or family I think it is a good idea to understand how this person may react when faced with business investing and partnering conditions.
Many people always say keep personal matters separate from business. However I don’t necessarily think there is any clear cut and dry way to conduct business with family. It all depends on the combination, the family member or friend.
One thing that I would recommend however is to go through all the proper steps of creating contracts, agreements, business partnerships, entities and everything else.
Just because you are doing business with a friend or family member doesn’t mean that it’s an excuse to cut corners! You will want to make certain that you cross your T’s and dot your I’s, otherwise this can leave an opportunity for unnecessary disagreements and conflicts down the road.
So the next time you’re hanging out on a limb and are having a hard time finding that key partner or investor to propel your business into its next stage, maybe you’re missing an awesome addition by forgetting to consider those talents and resources that lie within your own family tree.
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Awesome article. I’ve been on both ends of the spectrum when it comes to healthy business relationships with family. On one side I received funding from my parents for my first business and on the other hand I have had some pretty nasty business deals come about with other family members. It’s can always work as long as there is trust and respect
Thanks David, it does take a lot of trust and respect in order for not only a family/friend business relationship to work, but any type of business dealings.
I think it’s awesome that you’ve had the opportunity to work with your family members on business deals and even have your parents act as investors, having the chance to work on deals with friends and family can sometimes make the process more fun!