When many entrepreneurs are starting their first business they may turn toward relatives to help provide capital, support and to combine expertise. There has been a long-time understanding that “you never go in business with your relatives” because of the troubles it can create mentally. However, there are many businesses which break this saying due to their success. So which is best for you? The following will give you the pros and cons of going into business with your relatives.
♦ Pro: Relatives can provide helpful capital
Starting a new business can be difficult when you do not have the proper amount of capital to get started. A relative could be the one that helps out financially so the business can launch.
♦ Con: Finances can often cause strain on relationships
When a relative finances a business, it can come back to bite especially during financial troubles. People don’t want to lose their investment which creates tension; this goes double when you’re working with a relative.
♦ Pro: Relatives can provide extra support in tasks
If you plan to take your business beyond what you know, you could look toward relatives to do jobs that you’re not great at which also lets your business expand.
♦ Con: Trouble can arise when people don’t pull their weight
Every entrepreneur and business owner will reach a point where they feel their employees may not be doing enough – its growing pains. Working with a relative that doesn’t pull their own weight can cause tension which you can’t pass off since they’re related.
♦ Pro: The business benefits additional members of the family
Perhaps the best reason to go into business with a relative is that instead of splitting profits with a stranger, each member of the family can benefit which trickles down through each family.
♦ Con: Some relatives aren’t in it for the long run
The problem with working together, sometimes, is that some relatives may not want to invest large amounts of time and will bail if the money doesn’t come through immediately – they’re in it for the quick buck.
Whether you’re starting your business with a close relative or completely avoiding them from the start; it does show you that there are certainly many positives to working with family but there are often a few negatives as well. Whichever your choice, do realize some of the pros and cons of going into business with your relative so you can avoid any problems or clearly see the benefits.