The honest truth behind starting a business with family.
You've heard it before and I will say it again, a business partnership is the closest thing you can find to a marriage...
Just like the rules in a $5 buy-in poker match don't seem to matter nearly as much as in a $100,000 buy-in, you have to reach a particular threshold of investment before things get dicey. When it comes to building a small business on the side, the stakes can be small. But maybe someone has quit their job to do this full time, maybe you reach $1,000,000 in annual revenue, maybe you take on a $50,000 investment and suddenly things seem scarily consequential. This threshold is different for everyone.
In a partnership, you share everything... I mean EVERYTHING. This includes assets, employership responsibilities, lawsuits against you, leadership responsibilities... No decision you make regarding the company will not directly affect the other person. Something you believe to be a good idea can come across as malicious to the other. These problems can seem small and insignificant in the beginning and get brushed under the rug in order to prevent conflict. But, once you pass that threshold of significance we just talked about, things can get dicey.
Let's say you hit a significant goal as a company, so you decide to purchase you and your partners a vacation across the world to celebrate. You approach them excited, because who wouldn't be happy about this?! After showing them your surprize you are harshly brought down for your ignorance on what it takes to be a business owner. But you, equally ambitious, originally decided to get into business precisely for the reason of being flexible and getting to go do fun things such as this. Next, you are met with frustration about the extreme cost of the vacation and the opinion that you are adding an unneeded stress to the company. You realize that any dollar you spend from the company is not only yours... it is shared. You purchased a vacation using their money, as well as yours.
Quickly you can begin to see how something seemingly insignificant can spiral into a difficult-to-have conversation that may just make you want to quit all together. I have seen business partners of 20+ years suddenly get greedy and tear their own businesses apart from the inside.
Working with family
Now able to see how business relationships can get complicated very quickly, you can imagine why so many businesses fail because young entrepreneurs are so eager to get up and running that they enter into a foolish partnership. In the case that you are not family, as difficult as it is, in the worst case you can always leave the partnership and/or company all together and be done. Perhaps unfortunately, being family, that is not something you can never change. Your parent will always be your parent and your aunt will always be your aunt. This is not something you can wish away along with a bad business experience. Feelings do get hurt, money can get lost, and livelihoods can be destroyed.
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