It used to be that most businesses were family run, whether it be a farm, a shoe smith, a grocery store, or newspaper.
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However, as we have grown more specialized in our skills, family businesses have become the exception, not the norm.
The norm today is to keep business and pleasure separate, which means of course if you are starting a business with a family member, that can be extremely difficult to do. Family businesses can be rich, rewarding experiences both from the point of view as a professional, as well as in terms of enriching your life and experience as a family. Business can bring family closer together working on a common interest, the business.
Bright Horizons, a premier employer sponsored childcare with locations across the United States was founded by a husband and wife team, but when it came time to raising venture capital, some investors were hesitant in investing in the company because the founders were husband and wife. What would happen if they divorced and what would this mean for the business and the investors? These are very valid and real concerns that you may hear from potential investors in your business so ensure you have a plan prior to them for addressing these concerns. Bright Horizons has gone on to be a very successful organization that went public and was recently acquired by a private equity firm, Bain Capital $1.3 billion.
Many siblings have also gone on to start and run, or were handed down very successful companies that they co-managed. As family members, trust is already established among the company founders, and siblings can often have complimentary skills that can benefit a start-up team. Perhaps one brother is a software engineer and the other brother a business leader who together can create a leading software firm or internet based company.
However, family run businesses can have their consequences. Fall outs among company founders is quite common and if the fallout with your business partner happens to be your brother, sister, or parent, it can have detrimental impact on your personal and family life. Before undertaking a new venture with a family member, make sure you have both written (not said, but written), rules for engagement when tough decisions with the business must be made. I believe in allowing one founder to be the CEO who has been placed in charge of making those decisions that cannot be made in a group. After all decisions need to be made in order for things to move forward.
Secondly, when starting a family business, ensure to provide yourselves with ample time away from the business and away from each other. Much like roommates can bicker when they feel their space is being invaded; family members who work and live together can make it feel as you're living every waking second with them.
Family businesses should be run like any other company including an outside Board of Directors who can help facilitate strategic guidance when the company needs it most. The organizational and legal structure of the organization should be well established and agreed on before embarking on your family venture.