Why do business with relatives and friends is a bad idea
The massive reduction that we are seeing today, lead to the fact that people often think or begin to create a business. At your own risk. But even if you have no seed capital to start doesn’t mean this idea should be abandoned. One option is to ask for help from loved ones. But that’s why it is not necessary to consider friends and family members as business partners, we will describe below.
1. Friendship does not guarantee business compatibility
When starting a business, you reasonably assume that if someone is trustworthy, they are friends whose faithfulness proven over the years, or relatives who are always there for you in a difficult moment. The head is built attractive idea of how warm your relationship grow into a successful business Union. And blissfully twisted in these dreams, you may not notice your first rake, which is fairly significantly able to hit you on the head. Very often people that have the same values and philosophy, have a completely different vision of the business objectives. Therefore, already at the beginning of the formation of a business plan or corporate culture you will face a significant conflict that can undermine even the strongest relationship.
2. Friends or family members rarely consider the worst option
A huge number of lawsuits occur between close friends who have a joint business. At the initial stage each member of the team is laid out in full to the invested funds, time and effort paid off and brought profit. Few people think about the legal part, or is measured by merit, who and how many did for the General case, because it is common. Moreover, it is a close friend, brotherly heart to insult each other with mistrust, doubt and conversion.
But his own shirt closer to the body, and it becomes particularly evident in times of crisis and difficult times. Therefore, entering into such an adventure, you need to consider all possible scenarios of your joint venture, including the worst. It is necessary to legally protect each other in the future his friendship if we ever need to abandon ship.
3. The problem of the distribution of business roles
Usually friendships are formed organically, there are no specific roles or hierarchy. The same can be said about a business partnership in which an integral part is the explicit presence of a leader. The need to take one side as authoritative and dominant can create an imbalance in the existing friendship and eventually lead to quarrels and misunderstandings.
4. The difference your business goals
Your motivation and goals may be different from the priorities of your friend or relative. For example, while you strive to implement a long-term goal is to launch and develop a successful business, your «colleague» is considering the project only as a means of possible additional income. This gap in expectations can be devastating because it undermines at the root of business growth and compromises friendships.
5. The price of failure becomes higher
According to industry statistics, 45% of all small businesses fail within the first 24 months of trading. This undermines not only the financial condition of the entrepreneur, but also a personal relationship with a business partner. Passive aggression, hidden resentment and accusations, innuendo and open accusations – that’s what you can expect if you bring in the business. The cost of failure becomes higher: it compromises both personal and professional relationships.
6. The issue of funding
There is an old folk wisdom that says you should never borrow money from a friend or close relative. The same principle applies to running a business enterprise. Each partner may need to invest some personal capital into the venture, which in turn creates a financial mechanism that binds two friends in the legal agreement. Therefore, until recently, avoid to demand more than the agreed amount to Finance the joint venture business.
7. You will have to fight for weekend and holidays
If you’re starting an independent business together with a close friend or family member, you both get a serious load on your working and personal space. Plan a vacation or a weekend during the holidays becomes quite a difficult task, as the lack of leadership in the workplace can bring your business to the brink of crisis, and completely unexpected. If you do not have a reliable employee who can guide things in time of mutual absence, it’s time to think about finding such indispensable person.
8. Lack of experience
Besides the ability to provide the initial investment, carefully selected independent business partner can give you invaluable experience and knowledge. Giving preference to a family member or friend, you are depriving yourself of possible trump cards and the necessary tools for success.
9. Emotions can dominate over business
Times of crisis and difficult times can ruin relationships and push both parties to act irrationally. Loss of control is a death knell for any business.
10. Difficulties in assessing the performance and effectiveness of
If your employee messed up, you would run him in the tail and mane, perhaps without vaseline. Now you need to choose words and expressions, providing constructive criticism to a friend or wife in a digestible and delicate. The potential impact of negative criticism can lead to serious quarrels and way even between close friends.