Going into business with family
In the beginning, the benefits of going into family business can be appealing, you don’t have to go at it alone, you can spend more time with the people you love, a legacy can be built and passed onto the next generation but most importantly, you trust them.
Nevertheless, it is crucial to realise that personal and business relationships are two very different things. Some consideration and planning at the outset can help build a solid foundation and reduce the risk of emotional and financial conflicts.
A common issue in family business can be that decisions are made upon assumptions, assumptions that the other family members will agree without (at least on the face of it) any disputes. This is why it is important to get everything on the table at the start, you need to be on the same page, be open to honest feedback and make sure all roles and expectations are well defined.
Here are just a few things to think about:
Decisions, Decisions, Decisions
What are each of your personal goals and future plans
Who will take on what role
Do you share the same vision
Will the structure achieve the vision
Are the ‘what ifs’ clearly defined
A way to come to an understanding on these matters, and save relationships should things go wrong, is to put in place a partnership or shareholders agreement, (and potentially partner or director service agreements).
Certainly in the first stages of a business it may be thought of as a waste of time and a cost that is simply not necessary because everyone knows what the plans are. However, circumstances can change and these agreements can help remedy any disagreements that may arise.
If the agreements are not in place keep revisiting whether there is a need to get them in place whilst things are good. Moore and Smalley can make sure you get off to the right start working with you and your legal team providing trusted advice and support.