In the fall I wrote about nine things you should consider when starting a new business venture. I thought it to be pretty complete. Then someone asked me to write about going into business with a family member. What did I think about that and did I have any words of caution? That’s a pretty thought-provoking question.
As I began to think about this timely and sometimes emotion-laden subject, I realized that my partner, and wife, wrote a blog entitled “…Best Stories about Surviving the Family Business” in October 2012. She had just come back from lecturing at the Family Firm Global Conference in Brussels where she spoke about the issues associated with second and third generations in family businesses. But the question asked of me was not about 2nd or 3rd generations. It was a good question about today, not a multiple-generation concern.
So I thought about my business partner─ my wife ─ and why I decided to join what was really her firm after I retired as CEO of a company I founded. With that, I asked myself why did I join Simon Associates Management Consultants LLC? I then turned that decision-making process into a series of questions that you, the reader, should ask yourself before embarking on such an adventure. The questions are as follows:
- How well do you know this person, this family member? Seeing someone at the family picnic once a year, once a week, or for that matter, being married to that person isn’t good enough! What is their work ethic? Is it similar to yours? What are their skills? How will they react at the first crisis? If the answer is satisfactory, go on to the second question.
- What is their vision and is it consistent with yours? Where do you see the business going? If you wish to build a multi-channel organization and your partner is happy with much smaller goals, you may have picked the wrong partner in spite of a family relationship. You will end up with a speed boat attached to an anchor.
- What philosophy do you bring to the table? I would think that if both of you do not see the basics in the same way, it will lead to difficulties. How do you treat your suppliers, your customers, your employees?
- Is the work week 40 hours or is it 24/7? I am not saying either one is good or bad. But not having a common understanding is probably bad. I once had a partner who would come in at 10:30 in the morning but stay late. I was in at 7:30, so we complemented each other. As a matter of fact we could probably have opened up a 24-hour diner!
- What skills do you bring to the party? Does your potential family partner bring the same skills or does he/she bring complementary skills? Is this important or not?
- Who is going to bring funding to the venture? Will this new venture be underfunded or sufficiently funded and how does that affect the equity stake? Remember, no one wants to feel they got the short end of the stick, especially not a family member.
I have been in a number of new ventures with partners. Having encountered these issues in the past, I know from experience that it is easier to think about them before you commence on a new enterprise or venture. Just remember: it is easier to abort a business without any family ties.