Risks of Starting a Business With Family Members
If you are thinking of starting a business in San Diego, one option you are likely considering is starting a company with a family member. After all, some of the most successful companies in the world began as enterprises between family members. However, there are also many family-owned businesses that have failed.
Usually, experts warn first-time entrepreneurs against starting a business with family members. The reality is that there are a lot of risks to starting a business with family members. That said, the decision on whether or not to start a business with family members is entirely up to you. This decision is complex and is never clear-cut.
Let’s take a closer look at the risks of starting a business with family members;
Things May Get Too Comfortable
When running a business, you are not supposed to be comfortable. If you are too comfortable, the growth of your business may be adversely affected. For example, if things get too comfortable, it can repress the desire to, among other things, embrace fresh ideas and boost professionalism.
Conflicts From Work May Carry Over to Your Personal Life
If a conflict arises in the workplace, it may follow you home. If that happens, it may cause serious rifts between family members. Unfortunately, some disputes can damage relationships between family members.
Conflicts From Home May Carry Over to Work
Also, conflicts from home can follow you to work. If that happens, the business may suffer. If disputes are not resolved, it might even result in your business breaking up.
Family Members May be More Prone to Breaking the Rules
Indeed, even a traditional employee or business partner can break the rules. However, a family member may be more prone to break the rules. Sometimes, in family businesses, people take advantage of the fact that they are family. Other times, family members break the rules subconsciously.
Family Baggage Can Plague a Family Business
For example, resentment from childhood can cloud business judgment. A family member may see a disagreement as disloyalty. Usually, dysfunctional relationships between family members get worse in the business context.
Resolving Business Disputes Can be Harder in a Family Business
All business disputes involve feelings of betrayal, ingratitude, and lots of other emotions. In a family business, this is true in the extreme. If too many emotions are involved, critical discussions and decisions may be derailed, which might adversely affect your business.
Feedback Can be Taken Extremely Personally
In any business, offering feedback to partners and/or employees is crucial. If you give negative feedback or criticism to a family member, it may blow up in your face. If you offer criticism, it may cause a huge conflict. Unfortunately, the negativity that comes after a family member has taken criticism personally can set a business back or even cause it to break up.
You May be Reluctant to Make Important Decisions
If a decision you want to make will negatively impact a family member, you may hesitate to make it. For example, if a family member is not performing, it will be tough for you to talk to them about potentially bringing in someone else to replace them.
Contact Us for Legal Guidance
If you are considering starting a business and need guidance on the entity that would be best suited for your business, contact a business lawyer at The Law Offices of Kris Mukherji at KMSDLawOffice.com.