3 Steps To Take Before Going Into Business With Your Family
EMMA BOWDLER
I’m a cheerleader for women and an accountant bursting with personality.
We’ve all heard the saying about family; you can’t live with them, you can’t live without them. But what do you do when you want to go into business with them?
Being honest, there are a few things you need to consider before starting a family business… or even just bringing on a relative as a business partner.
Why you ask?
Working with the people who know you best can be a hindrance. After all, you’re doing high-stakes business with those who know your greatest strengths and weaknesses.
But did you know, ironically, the top-reported issue when it comes to family businesses is communication among members? This is followed by letting go of leadership.
Before you start mixing your professional and personal life you need to hang your family hat up by the door, get organised and talk to each other without making assumptions.
Step one: Develop a business plan
I’m going to go out on a limb and assume if you’re reading this you’ve had a great idea for a business and are thinking of bringing family onboard.
That’s great. Before things kick off, please do yourself a favour and come up with a business plan.
Now, this goes way beyond where you want to be in five years. In your plan you should clearly:
- Define each person’s roles and responsibilities
- Determine pay structure
- Define who owns what and how much
- Create an exit strategy for each member
- Outline a succession plan should you envision passing the business on
I know this sounds like a lot of legwork before things even start, but by careful defining roles, exit strategies and a succession plan, you lessen the potential for ugly disputes down the line.
“…hang your family hat up by the door, get organised and talk to each other ”
EMMA BOWDLER
Step two: Get any and all agreements in writing
When working with family, it’s easy to think, ‘it will be fine – things will work out down the track, we’re family’.
This is the biggest no-no.
A family venture is like any other business and all agreements should be formalised via a contract.
In a formal contract, you should outline who does what, who gets what, who is paid what, and how they leave.
This is why coming up with a business plan and communicating openly about it is so important in the initial planning stages. You don’t want any nasty surprises coming up when you’re about to sign on the dotted line as this will delay your kick-off.
EMMA BOWDLER
I’m a cheerleader for women and an accountant bursting with personality.
Step three: Have a conflict resolution resource on standby
Family is family and when money is involved, you can bet your bottom dollar disagreements will arise. Most disagreements will be fleeting, especially if you have open and honest communication, but there is no harm in being proactive and keeping a trusted advisor in the wings should things ever escalate.
Mediation through a neutral party is a great way to bring outside perspective to an issue, communicating in a constructive way, and best of all, it stops the workplace from entering into wider family life.
I want to close on some heartening statistics I found, in case I’ve made you think all this sounds like too much hard work.
Family businesses account for around 70 per cent of all businesses in Australia. The average turnover is $12 million per annum, and the average age of a family business firm is 32 years.
When done right a family business can start an empire. But go about it with your head and not your heart. Are you willing to lose your family if it all goes pear-shaped?
EMMA BOWDLER
I’m a cheerleader for women and an accountant bursting with personality.
Jump off the hamster wheel and join our party of badass women taking control of their business and life!
Feast or Famine: Dealing with the Ebbs of Business Cash Flow
Feast or Famine: Dealing with the Ebbs of Business Cash Flow Cash flow lumpier than your mother-in-law’s gravy? You’re not alone. Let’s talk ‘feast or famine’ cycle and how to manage your cash flow. Emma BowdlerI’m a cheerleader for women and an accountant bursting...
Budgeting 101: How To Nail Your Numbers with the Bottoms Up Budget
Budgeting 101: How To Nail Your Numbers with the Bottoms Up Budget Emma BowdlerI’m a cheerleader for women and an accountant bursting with personality. Let’s face it, you read the word ‘budget’ and immediately, your eyes glazed over. We don’t blame you. Hardly the...
Why We Need To ‘Invest In Women’ All Year Round
Why We Need To ‘Invest In Women’ All Year Round Beyond International Women’s Day, five practical ways to create change in our businesses and lives, for gender equality and women’s economic empowerment. Emma BowdlerI’m a cheerleader for women and an accountant bursting...