Natwerk Designs

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Work, Family… Together? Picture this: You're sitting with your spouse, and the two of you are talking about starting a company that manufactures and sells organic children's clothing. Your husband will handle the business side -- he has an MBA -- while you, whose hand-sewn outfits are the envy of neighborhood moms, will focus on product design, production and promotion. But should you work together? There are certainly advantages to running a family business, including a built-in sense of loyalty and a shared investment and commitment. "There is a higher trust level involved when people know each other so well, and this essentially lowers the cost of capital for the business," says Andrew Keyt, executive director of the Loyola University Family Business Center. He says family businesses also tend to carry less debt. Family vs. Business Issues Of course, there are some real disadvantages. Family members who are also business partners often have difficulty separating their personal and professional agendas. They can find it hard to make business decisions independent of the relationship. "The intensity of family members working closely together creates strain," says Mr. Keyt. And there can be spillover from home that hurts the business. "Unaddressed family issues can distract partners from coping effectively with important business challenges." Jim Grosspietsch and his wife, Tracy, run an interior-design firm together and have experienced both the pros and the cons. "As a designer, Tracy guides the mission and vision for the firm, while I manage all of our business functions," says Mr. Grosspietsch. "We work from home on flexible schedules and share household roles." On the other hand, balancing the needs of business and family and cash flow are twin challenges, they say. And while finances are a major cause of stress for most married couples, "it's much worse when you manage a business with your spouse," he says. Long Odds for Success Despite the fact that family businesses encompass 85% of all American businesses and generate over 60% of the gross national product, a startling one-third of small businesses -- including family-owned firms -- fail in the first year. But there are ways to increase your chances of success. The first step is to be honest with yourself. Do you and your family member already have a strong relationship that includes healthy communication and mutual respect? Are your work ethics similar, and do you share goals, expectations and a passion for the business? The answer to both should be yes, or close to it. Then, before you launch, consult an attorney and set up a formal plan of operations similar to the sort you'd do with a non-family partner. "Be sure to have well-defined roles in the organization so you don't step on each other," says Mr. Grosspietsch. "Each partner needs a set of activities to oversee." You also need to think about the worst-case scenario. "Start by creating your exit plan," adds Mr. Keyt. "Ask the question: 'If things aren't going well, how can we recognize this and leave the business in a way that preserves our family relationships?' "

Public Comments

1. A family based business has many advantages and disadvantages. Several of these advantages include "a built-in sense of loyalty and a shared investment and commitment." Disadvantages range from failure to establish a boundary between family and business needs, differing "work ethics", and business "goals." Yet those advantages must exist in an environment of "strong relationships" and "healthy communication"; there must be a long-term commitment to succeed despite the likelihood of stress brought about by different financial challenges. Despite the fact that "one-third of small business--including family-owned firms--fail" success can be enhanced by working with a lawyer to prepare a business plan, define specific business roles for partners, and develop an exit plan. But, most importantly, it is necessary to develop an "exit plan" that does not impact strong family relationship.