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The Seven Challenges of a Family-Run Business

Starting a business with your spouse, your aunt and uncle, or your older brother may sound like a dream job -- and it may very well be -- but family-run businesses bring up a unique set of challenges that other business owners do not have to face.

family business

Working with family means spending long hours together -- both in and out of the office.

Any new business is risky -- according to the Bureau of Labor Statistics, only 44 percent make it past four years -- but when you're dealing with family, there are relationships and life-savings at stake, not to mention preconceived notions about each other that will need to be overcome.

Before you decide to take the plunge and open up shop with your family, here are some of the challenges that you should be prepared for.

  1. You'll be spending a lot of time together. Running a business will be different from socializing at a family get-together. So you and your family members must be able to get along well, and really enjoy being together, for long hours, and in a lot of different situations

  2. All of your eggs will be in one basket. If you start a business with your spouse, for instance, you are putting your financial future at stake, should the business fail.

  3. You may become your dad's boss -- or your younger sister's employee. One of the biggest challenges of working with family is that you'll need to overcome family roles to take advantage of each person's skills. So if the youngest member of the family is truly the best manager, he or she should be put in charge (even if the opposite is true in family situations). To circumvent problems in this area, you absolutely must develop written job descriptions and roles for each member of the business.

family business

If you decide to go into business with your spouse, how will you keep your business life and your home life separate?

  1. Your "silent" partner may not be so silent. If your great aunt invests tens of thousands of dollars in your new business, what will she expect in return? Be sure that everyone's expectations for the business are clear and put down in writing to avoid conflicts down the road. For instance, is your aunt's contribution simply an investment, or will she have a say in your day-to-day operations? Now's the time to figure this out.

  2. You'll need to know who's doing what. It can be easy to make assumptions with family members, but when it comes time to reprimand an employee or deal with an unhappy client, who will take charge?

  3. What will happen if the business changes directions? If the business is not doing well, will your family members be open to new ideas? And what will happen if someone wants out completely? A business venture gone south is capable of breaking up family relationships if you're not careful.

  4. You will need to separate work and home life. If you're working with your spouse, how will you transition from your working roles to your home roles? You will need to set aside time to nurture your relationship along with your business, which may include setting up rules (no business-talk at the dinner table, taking one long-weekend away every few months).

Starting your own family business can indeed be one of the most rewarding decisions of your life. Simply take the time to consider the challenges, and decide how you'll overcome them, before you take the risk.

Recommended Reading

The Top 10 Industries to Start a Business in Now

How to Find Your Dream Career: 11 Key Steps

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