“Never go into business with family or friends,” is advice you’ve probably heard. However, people often place certain value on buying from family-owned businesses. Weigh the pros and cons of going into business with family and friends to make the right choice for you. Although you don’t want to ever have disputes, businesses that last long are going to have conflict at some point. You should familiarize yourself with business law in Pennsylvania to understand what your responsibilities are and how to handle business-related conflicts.
Decreased motivation for innovation
Family-owned businesses may experience a lot of success for a while, but they might trend downward if executive positions go to family members who haven’t necessarily earned it. When they lack motivation, ambition, discipline and other important qualities for high-ranking positions in business, that is going to negatively affect your results.
It’s more difficult to discipline or fire family members and friends. You will have fear that they will take it personally and no longer want to have a relationship with you. The fear of interpersonal conflicts is a serious barrier to firing a person whom you know you need to let go. Business litigation and disputes are more uncomfortable when the person with whom you’re having conflict is a family member or a friend.
Better idea of what to expect from people
On the other hand, when you hire strangers, you don’t know what their character flaws are. Working with people you already know on a personal basis gives you a greater feeling of certainty. You already know what to expect from family and friends. People naturally put their best foot forward when they apply for jobs. You won’t know for sure how honest they were about their soft skills and strengths until they’re working at your business.
One of the top benefits of starting a family business is building generational wealth, assuming that the business succeeds. Many people who have children want to set them up for an easier life than they had. Starting a family business is a way of achieving that. You must instill principles for success in any family members you want to involve in order to improve chances of a long-lasting family business.
Going into business with family and friends can turn out good or bad; it depends on the individuals. You may improve your chances of a positive experience by learning about conflict resolution and consulting with business attorneys when necessary. The more you learn about what it takes to run a successful family business, the more likely it is that you’ll pull it off.