Starting a business with friends and family sounds like a great idea – and it can be! But like any arrangement, it does have its pros and cons, which need to be carefully considered.
Starting a business with friends and family gives you an instant familiarity with your coworkers, and an extra sense of personal responsibility – but it also means you have to be more wary of outside issues distracting you from business.
For more about the pros and cons of a ‘family and friends business, keep reading.
What Are The Pros and Cons of a Business With Family and Friends?
So, what are some of the pros and cons of a business with family and friends? Here’s a few things to consider:
| Pros | Cons |
| Instant familiarity and understanding of partners | Out of work disputes can intrude on the job |
| More flexibility in scheduling | Lack of outside inspiration and information – fresh perspectives |
| Lower start-up costs for hiring | Lack of interest or compatibility for different roles. |
| Ready-made community networking opportunities | Necessary critique can become far too personal |
| Family has a personal stake | Keeping family roles and business roles separate |
| Potential for less ‘office politics’ | Sorting out tax time |
All of these things are things you need to think about, especially since starting any sort of business is a difficult and time-intensive process.
When asked for a comment on working together with a friend or family, Linda Russels of AppObit LLC said, “As a CEO, I’ve learned that working with friends and family in business can be both a blessing and a challenge. While it’s wonderful to have a foundation of trust and shared values, it’s crucial to strike a balance between personal relationships and professional responsibilities. Open communication, clear boundaries, and a shared vision are the keys to successfully navigating these dynamics. Remember, it’s not just about maintaining relationships, but also about driving the business forward with professionalism, integrity, and a focus on long-term success.”
Pros of A Business With Family And Friends:
Let’s look a little bit closer at the positive aspects of a business with family and friends.
Instant Familiarity and Understanding:
In a business run by family and friends, there’s an innate understanding and familiarity with one’s coworkers.
This can help you work more smoothly together, and it takes less time to sort out strengths and weaknesses.
More Flexibility in Scheduling:
A family business allows the team to set a schedule that works best for their business, and for maintaining balance with their personal lives.
Days off can be arranged according to needs, and swapping out for things like medical appointments can be simpler.
Lower Start-Up Costs:
With family and friends in the business, personal resources can be pooled for the essentials in the business, like space, paperwork, computers, and products. This can lower overall start-up costs.
It also lowers employment costs. You don’t need to immediately worry about payroll and employment paperwork if everyone working is a partner in the business.
Ready-Made Community and Networking Opportunities:
When you have a family business, every member of the family has their own connections, friends, and associates they can contact to get the word out.
It creates the beginning of an instant network that can be expanded on far more easily than one person’s efforts.
Personal Stakes:
When it’s a family-owned business, everyone has a personal stake in the success of the business. This can provide more energy and effort for everyone as a whole.
The personal aspect of the business encourages participants to add that little bit of extra flair and personality, which can be the key to success.
Less Office Politics:
With family and friends, there’s a chance for less in-fighting among the workers, less focus on individual positions, and more on the business’s success as a whole.
Cons of Starting Business With Family And Friends:
Now let’s look at some of the negative aspects of starting a business with friends and family.
The Intrusion of Outside-Work Disputes:
Working with family and friends, it can be easy for disputes outside the workplace to intrude on your work hours.
When family and friends are work partners, any tension between you can affect the smoothness of your operations, which can break a start-up business.
Lack of Outside Influence And Fresh Perspectives:
It can be hard to keep ideas growing and evolving. With only family and friends, it can be difficult to get fresh perspectives on projects.
The lack of outside perspective can also result in overlooking critical components that an outside view might catch.
Lack of Interest Or Suitability For Roles:
In a small family business, you might not have people to fill all the necessary roles, leaving people in roles they dislike or aren’t suited for.
Dislike for roles can lead to lower productivity, and people who are unsuited for their roles may require extra time to help – time you might not be able to afford.
Necessary Critique Can Feel Too Personal:
Sometimes, there needs to be constructive criticism. However, if it’s among family and friends, it can be easy for this to feel too personal.
Without constructive criticism, growth and improvement are impossible. If people feel it’s a personal attack, it can become unnecessary tension.
Separation of Outside And Business Roles Is Difficult:
There is a certain hierarchy among family and friends and it doesn’t always translate to the business world. Even when it does, the two roles shouldn’t mix.
This can be a difficult balance to keep, especially if roles in the business DON’T mirror roles in the family/friendship dynamic.
Tax Time Is Confusing:
Business taxes can be difficult at the best of times. Divided among friends and family as opposed to employees and employers, it’s even more so.
Determining how each person files the taxes, or how the business taxes are distributed among participants financially can be an extremely delicate and time-consuming task.
Final Thoughts:
Starting a business with family and friends can be an amazing experience. However, it’s important to be mindful of the difficulty of starting a business, and the potential pitfalls of working with family.
