The Friends and Family Plan

May 5th, 2009 by Sharon Larsen

After learning that three is a dangerous number, today we talk about starting a business with close friends or family.  It too can be dangerous, if not properly handled. 

 

 

Ah, the family business. It’s a time-honored, American tradition. It’s also one of the best ways to kill your venture (or your siblings). Everyone likes to complain about work from time to time, but it’s not as easy to complain during Thanksgiving dinner when your boss is the one carving the turkey. This can cause some real problems, for your venture and your appetite.

 

I’ve seen situations where a husband and wife got involved in businesses together, and it took a heavy toll on both the business and the marriage. I’ve known quite a few people who own businesses where their entire family is involved.

 

There are times when family businesses work, but frequently they don’t. On the outside, they may seem to work just fine, but if you ask for the inside story, you’ll find out that uncles don’t talk with nephews, and the son hasn’t spoken to the father in five years, and someone in the family is not pulling their weight.

 

My father is a very wise and thoughtful man. He was the elected county attorney in our community for 36 years. At the age of four he became blind, having both of his eyes removed to prevent the spread of cancer. His experience as county attorney allowed him to offer the following invaluable insight. “Most partnerships fail because each partner only wants to give forty-five percent. With that kind of effort, the venture is always coming up a bit short. In order to find success, each partner needs to be willing to give seventy percent.” (John. O. Christiansen)

 

Frequently, with family we don’t feel as big a need to prove ourselves or do our part. Right or wrong, it seems easier to take advantage of someone you love.

 

Again, the only thing that can be more disruptive and more damaging to a family-run business than failure is success, if it isn’t approached right. Challenges can help people work together and sacrifice. Success can bring out greed and encourage loved ones to cut in line or cut and run altogether.

 

There was a very successful businessman who amassed a fortune worth over one billion dollars. As he retired, his entire family became involved at various levels with the holdings of the company. The family now hates each other; there have been internal power plays for control, suicides, divorce, and every other crisis that can be imagined in a family. Most of the discord revolves around “the family money.” I once heard this famous businessman state he would forego all of his riches just to have a united family.

 

Is it worth sacrificing your greatest riches in life—namely, your family relationships—for the fleeting riches of this life? I strongly believe not!

 

It’s important to note that family-run ventures can work, if you take the right precautions. What are those precautions? From my observation, the most important thing is to have rules and structures that clearly and openly delineate the involvement of the family members who enter the business. The second precaution? Give time, energy, and focus on a goal or vision greater than the acquisition of money or things.

 

Make sure you feel comfortable having open, honest discussions with your family member partners. Disagreement or conflict about the business cannot translate into contention in the home or at family events. However difficult it can be, you have to make sure that everyone is mature enough to keep the two relationships separate.

 

No matter who your partner is, you need to share a work ethic and style. You also need to be invested in each other’s image. Help your partner look good. There is no room for selfishness in any partnership. Unfortunately, there is something about family businesses that can readily bring that destructive character trait to the surface.

 

Porter’s Points—The Friends and Family Plan

 

  • If you choose to partner with family, treat the partnership like a business, not a family outing.
  • Temper the quest for success and the unpleasant scenarios that quest can create, by giving time, talents, and energy to a worthwhile cause (charity, humanitarian effort, foundation, etc.).
  • Put your partners’ well-being before your own.

 

 

If you want to start a family business, or already have one, make sure you have rules in place that ensure close relationships aren’t sacrificed! 

 

 

3 Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment