SHOP LOCAL: Be cautious when mixing family and business

Family and business doesn't always mix well.
Family and business doesn't always mix well.

Does the family that pay together, stay together?

From international behemoths Airbnb and Walmart, to Australian household names News Corp and Akubra, friends and families have a long history of forging lucrative business partnerships.

Given that trust, mutual understanding and shared values are fundamental aspects of any business partnership, your nearest and dearest would seem the logical people to launch a business venture with.

There is, however, more to business success than love and rapport.

Business and money frequently sour relationships that once seemed unbreakable.

There are thousands of successful family businesses in WA, many of them multi-generational enterprises.

There are probably just as many fractured friendships and families as a result of failed ventures.

A shared love of interpretive dance may make for conversational common ground but it doesn’t necessarily translate to business compatibility.

In any business, product and service are the basis of success but businesses involving family and friends have some unique considerations.

Separating work and home life is not as easy as logging off or downing tools.

Out of hours, it’s important to know when to switch off.

While some business talk is probably inevitable, it can be wise to refrain from “talking shop” or limiting conversation to matters that cannot be addressed during work hours.

A shared love of interpretive dance may make for conversational common ground but it doesn’t necessarily translate to business compatibility.

Opposites do attract.

Look for business partners with complementary skill sets that will cover the wide range of tasks required in a business team.

One of you might, for example, be the technology guru while the other excels in meetings and client interaction.

Establish distinct and well defined roles from the very beginning.

Set boundaries and communicate with each other about every aspect of the business, even the uncomfortable parts like money.

As with any relationship, communication is key.

A shared sense of humour is important but a business will thrive when all partners enter into the enterprise with integrity, a strong work ethic and the persistence to get through the challenging times.

You may have grown up together or trust each other with life’s secrets.

Regardless of the mutual respect, it is essential normal business practices are followed.

Formalise the financial and operational structure of your business.

Seek legal advice so you detail how much of the business each person owns and what happens if someone wants to leave the business or dies or, if there are problems, how you will resolve them.

A Harvard Business Review report found that listed family businesses outperformed non-family businesses during the 2001 and 2008 financial crises.

This was partly driven by their loyalty, concern for future generations and preserving the family name.

Despite the saying, business and pleasure can mix – but only if everyone involved shares the same passion and commitment.

The SBDC provides a range of services to the small business sector, from business workshops to advisory services and much more.

Visit smallbusiness.wa.gov.au or contact one of our experienced team on 13 12 49.