Starting a business with your family: awesome opportunity or certain disaster?

Some of the best - and the biggest - companies in the world are run by families, from Wal-Mart (run by the Walton family) to Fiat and Ferrari (run by the Agnelli family) to Dell (run by Michael Dell).

Do you aspire to put your family's name on that level? Or maybe you'd love to start a landscaping company with your daughters or a small cafe in your town with your husband. There are lots of success stories of families going into business together, but also many cases where working together failed spectacularly. Here's what you should think about before deciding to take the leap into building a business with your family.

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Why do you want to start a business with your family?

Skill reasons: Successful businesses often arise from complementary skillsets across founders. One family member may be operationally gifted while another excels at sales and marketing. When powers combine, the collective brainpower can be a powerful engine for a new venture.

Financial reasons: With limited resources, pooling funds from multiple family members may be required to capitalize a new business. The shared financial commitment pays dividends by ensuring everyone has stakes in the game. 

Personal reasons: Many aspire to spend more quality time with loved ones than the modern daily grind typically allows. Co-captaining a business together immerses you in a mutual mission and experiences you couldn't replicate otherwise.

Make sure your family is in it for the same reasons: Before proceeding, ensure your motivations - whether skills, finances, or personal bonds - are aligned among all involved parties. Conflicting expectations breed conflicts down the road.

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Will you be able to work together effectively?  

Think about other projects you've tackled together, from chores to home improvement - how smoothly (or not) did they go? Collaborative history is a good predictor of dynamics when the stakes are even higher with a business on the line. If simple tasks devolve into squabbles, continuing that pattern could be disastrous when livelihoods and relationships are at risk.

Who will own what? Will someone be in charge? How will you make decisions? What will everyone work on? Get granular about roles, responsibilities, decision rights, and equity stakes early. Lack of defined leaders and processes for dispute resolution can create power vacuums ripe for infighting.

Finally, align on what success looks like together. Does success mean eventually selling for a windfall? Achieving certain revenue levels? Having a sustainable self-employed career? Get on the same page about goals, benchmarks, and timelines to collectively march toward.

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Test it out first

Before fully taking the leap, consider doing a more limited version of your family business first, whether that's selling a sample product at a local market (or online on a Shopify store or Etsy), hosting a big fundraising dinner for your neighborhood (if you want to start a restaurant), or taking on a single client. Testing the waters without fully committing will give you a sense of whether the experience will be as good as you think it will be, and will give you lots of areas to dig into together as a post mortem.

A trial run reduces the chance of unpleasant surprises after investing significant resources. It provides a lower-risk means to validate your collective strengths and weaknesses. Hashing through disagreements on a modest scale beats going nuclear on a fully-fledged business.  

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Final Thoughts

Ultimately, starting a business with your family can be the ultimate version of work-life integration. Maybe that sounds like a dream to you, or maybe it sounds like a nightmare. Either way, spend some time talking about it with your family, aligning on your goals, and working together on small projects first to maximize your chances of success!

The bright side of mixing family and business is profound: you get to apply your unique family dynamics and chemistry toward an enriching common pursuit. The dark side is obvious too: if tensions flare, your business and your most cherished relationships could both be at stake. No matter what, preparation and self-awareness are prerequisites before going "all in" on a family business.

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