Check out what business expert Gene Marks has to say about starting a business with friends and relatives.
Video Transcript
I know a lot of people that go into business with a friend or a relative and there really are a lot of pros and there are also some cons as well. You know, one company comes to mind – they are a small manufacturer, about a 70-person company outside of Philadelphia, they’re a client of mine, and it’s four brothers. Very close. They are probably about 6 or 7 years of age apart. They’re about my age now, so they’re like around 50 years old, and these guys are at each other’s throats all the time. They are yelling and screaming at each other, but the – but, but they run a very profitable business and they’ve been running a profitable business for the past 20 years, but they suffer everything there is to suffer when you’re running a family business. You are just too much, you know, in each other’s business, is what it is. I mean, that’s the biggest con when you’re running a family – you’re around these people all the time. You are, you know, seeing them at holidays, you’re seeing them Thanksgiving, and you know, even your spouse is, and I know, you know, you can’t separate them because if one guy goes and his family buys a nice house, you know, the, the other person is like, oh, so-and-so bought a nice house. Why can’t we get a nice house? There’s just too much in a family business you really have to work out those issues. And, by the way, there’s also, you know, as far as passing the business down to kids, that also is a very, very hairy thing, too because, again, you have people that are, you know, some – you know, this person has 3 kids, this person has 2 kids, you know, what’s the inheritance that they’re going to get, and who wants to be involved in the business and how that’s all figured out. Very complicated when you’re involved in a family business. Those are really the cons of being – of doing that. The pros are huge, though. They really are. And the pros are really the reason why so many companies are family owned businesses, mainly because, you know, business is all about trust and working with somebody that, you know, you care about and somebody that’s not going to stick it to you if you get into a, you know, into hot water. And, you know, if you’ve grown up with somebody, a friend of yours on the same street and you know each other’s family and you’ve known each other for years, that person’s less likely to do something willingly to hurt you. Blood is thicker than water. You have brothers and sisters, if they’re in the business with you, um, you know, it’s just less likely you’re going to do something to hurt them because they are family. So, you know, there are those cons ‘cause it gets very sticky when you’re trying to get all the family members on one page and everybody’s got to be involved in the same, you know, they all know each other’s business, but the pros are such that if you can – if you have that relationship with your family member or that friend, you know, it really has the seeds of a long-term success.
