I have always been lucky to have relatives that I can bounce around crazy business ideas; but it struck me the other day that there are things I need to consider if I was to open a business with a cousin or even an aunt. Here are some of the pros and cons of being in business with family.
- You can present the best aspects of your family especially the values that the family hold true. The best example is family run retail shops. They always have a motto that derives quality and honesty within the same sentence. This means the founders have a sense of pride showing this values which can be considered necessary in the daily life of not only the family but also an individual.
- The understanding that you can leave a legacy behind, which encourages founders, especially during initial stages when faced with tremendous struggles, to carry on. This legacy ensures that descendants can challenge themselves to expand the business to new heights. The best examples of this are major corporations that started as family businesses and have managed to survive hundreds of years later.
- The family business is also a way to teach children the values you want to instill in them. Many entrepreneurs or even corporate executives tell stories of how they learnt important lessons about life when the family business was struggling or when they had to take odd jobs. It is necessary to expose children to hard work and even resilience so that they can appreciate success.
- Family members are able to improve themselves personally and professionally. This is because the challenges faced in day to day activities of the business have lessons in store and can instill patience that is needed for the business to thrive.
- It is easy to forget to put in place legal structures. This is because most family businesses are started when family relationships are at their best and the legal challenges come across during major conflicts.
- Many business owners forget to have a succession strategy or assume that their children will take over the business, which isn’t always the case.
- The employees are all family, and they can get complacent; and it may become impossible to maximize employee resources to full advantage.
- Challenge of separating personal and professional relationships may arise.
- Leadership challenges sometime arise, as some families assume that the responsibility falls on the oldest though it is necessary for the responsibility to fall on the one who has better management skills.
- The changes in family dynamics are often ignored and thus can create a vacuum, as the family member who had a particular responsibility is not able to avail themselves; and this can create conflict among those left in the business.
- Lack of professional mediation to ensure that disputes are resolved in an amicable manner is taken for granted as families assume that they can solve it with meetings held within the family. It can lead to financial woes that can drag on as the aggrieved family member is not satisfied with the ruling. The presence of someone neutral would allow the conflict to be resolved in a more professional manner
Family business has never been easy but it is possible for the business to thrive if the right foundation is put in place.
Are you in a family business? Please share your experience with us in the comments below.
Nyakio Kiruthu left the world of banking after 4years to venture into the world of business. She is a shareholder of Thayu Farm hotel, a family business. She holds a degree in Economics and Masters in International Business which enables her to explore the world of business through a unique perspective.