Doing Business With Family

Doing business with family is kind of like doing it with friends, but more intense. I've seen the most successful family business partnerships and the worst of the worst. I believe it all comes down to greed and how much each person involved in the business is willing to "give up." On the positive side, I don't think there can be any stronger bond than within ones family. Like with any business partnership, I think each person needs to understand and cover the basics of the business, before the work begins.

First, lets look at the positives of a family partnership. A lot of partnerships that go bad, have one thing in common. It all has to do with a personality clash between the business partners. This is usually because the business partners don't know how to deal with each other and each time they have a different opinion on things, they end up disputing the decision instead of coming to a mutual agreement. I think when you are doing business with family, you at least know the personality of the family member, so you know how to deal with them and they know how to deal with you. Even though you probably don't agree on everything, you could probably come to a more mutual agreement, quicker, than if you didn't know the other person very well.

Another positive of a family partnership, is raising the family name. Many entrepreneurs want to make their family well known for their business, which comes in conflict when you have various names trying to reach the top. But with immediate family members doing business together, you are all working to raise the same name, to the top and leave a legacy for something great.

There is also more emotion involved when doing business with your family members. If you had to put in a few extra hours for your sibling or cousin, you probably won't be upset about it. But if you had to put in extra hours for a business partner that wasn't your family member, you might be a little upset because "they aren't pulling their workload." The relationship factor between family members definitely softens the business relationship and it is harder to refuse to do something.

Obviously there are a ton of other positives when discussing family business partnerships, but there are numerous negatives to them also. The main problem that I always see when family business partnerships go down, is the greed-factor & jealousy. Lets face it, everyone has been jealous sometime in their life that their older brother got that toy, that you never did. Or the younger sister was always getting what she wanted, but you had to sacrifice. Or it might even be taking orders from your oldest sister and doing her chores for her. Often times, kids hate sharing their belongings with their siblings. Whatever it is, in business, people get jealous & greedy when they are doing business with their family members and the other person gets more money or benefits than themselves. Small things turn into big things and eventually the partnership can end and sometimes even the personal relationship ends, leaving the family members not speaking to each other any longer.

With the positive of understanding and knowing the family members personality, comes the negative of not cooperating. Sometimes even knowing a person, isn't enough to persuade them to go your way. With a family business partnership, sometimes people get extremely upset when their decisions aren't the ones that the company moves forward with and that sometimes leads to a failed partnership.

The last major point involved with negatives to a family business, I want to state is, all the dirty tricks and games that go on. When everything turns into a competition, sometimes it brings out the worst in people and verbal communication sometimes gets super defensive. It's important to keep your cool, but some don't do it which ends the partnership in an extremely disruptive nature.

In the end, doing business with a family member is like walking a delicate line. You have to be careful so you don't snap the line and fall off on either side, but at the same time it can be really beneficial if everyone works together and understands that "person A" might walk away with a little more than "person B" at the end of the day and you should all remain fair to "person C" and not split the goods between "persons A & B." And you also cannot hide the strength or weakness of your family business, people will be able to see right through to the truth and sometimes even take advantage if they see that your partnership is weak.

I think Donald Trump has shown the best example. If you look back to the first season of "The Apprentice" TV show, you will notice that the two people the sit on each side of Donald, in the board room, are his staff members (non-family). Now if you take a look, on one side is his daughter, and the other his son. This shows that his family business link is unbreakable, for now at least... And the Trump name is huge.

Finding A Business Partner

After talking about getting a business partner for a new venture, a few readers requested that I write about how to find a good business partner. There is no playbook to find a good business partner, but I use some of the following strategies when I am seeking a partner for a new venture.

Note that each situation can vary and depending on the talents of the person, I sometimes look for all factors and sometimes just particular talents in a future partner.

-An expert- As mentioned in a post about exploring new turf, it is a great benefit to have someone who knows the industry's ins and outs, when you are starting up a new company. They usually know what to avoid and what helps in terms of growth and planning.

-Financial capacity- This is sometimes a huge factor and sometimes not. Depending on the size of the venture, I offer partnership on the amount of financial capacity people have. If a person can bring more money to the table, it is certainly a good thing, but if a person doesn't have a lot of money to invest and they have A LOT of talent, I still might take them on board as a partner.

-Experience- I really don't deal with any people who are inexperienced because I don't like to deal with the lack of knowledge some people have. It just slows down growth of a company and if there are more than just one other partner, things can get complicated.

-Involvements- If I am starting a new company and a prospective partner has connections or involvements in other companies in the same industry, I will take a closer look at them because they might be able to "pull some strings" to accelerate the company's growth.

-A little different- Say that two people want to start a web service. I would say that the ideal combination of talents should be that one person is a guru at programming and another person is a guru at marketing. Having a partner with some different expertise can help a company tremendously. There isn't much sense in having a whole lot of something and absolutely nothing else.

-A known person- I haven't really ever done business with people I don't know. The only time I do that is when someone I know brings someone they know to the team. Having the assurance that you have known a partner for a long time before you do business with them will give you a better sense of their style and abilities.

The factors always remain that you might want someone to be your business partner, but they may not want to come on board. Then there are other options such as: giving them a bigger share of the company for less investment, just hiring them for their talents instead of giving them partnership, restructure the venture as how they would like to roll it out.

It also goes to say that you should never put all your eggs in one basket and rely on a business partners talents to take a company to the top. Make sure you find the right staff and bring on more than just one other partner if necessary.

Working Alone

I hear about new ventures aspiring entrepreneurs are taking on, frequently, but one thing I don't hear as often as I would expect is that people have business partners. A lot of time people want to start-up a company single-handedly- or at least being the only founder so they can take a bigger piece of the action, but I say people shouldn't fish alone. Working alone can only mean that you win big, if you win at all. Most of the time, I never work alone, because I at least have one other business partner involved with each venture.

There are plenty of pro's to working alone, but I want to discuss the how it can really hurt an entrepreneur if you start a company alone and there is nobody standing by your side. Of course you have to find the right partners to take on the venture with you, but when you do it is all worth it.

-Multiple brains- We all know two brains are better than one, so the same thing goes for taking on a new venture with more than one person. When you are starting up a company, you will always run into problems, but it is how you address those problems, which will put you on top or make you fail. Having another person that is part owner of the company will surely give you high quality input on what should be done to address each problem.

-They don't just work for you, they work with you- Often times I hear entrepreneurs say, "Oh, I'll just hire a few people, instead of having a partner," but that doesn't work the same as a true business partner. People who work for you, do just that, they work for you. People who are involved with a company at an ownership level, care more about the success of a company and will generally put forth more effort and time into the venture.

-You think something is flawless, but they don't- When I think something is great and one of my partners thinks it is absolutely worthless. It brings a chance for discussion to the table. Flagging a possible disaster before it may happen. When you have someone to "check your thinking" usually it can be nothing but good in the end.

-They have connections too- It might take you two months to do something, which they can get done in two days. Having another person taking on a business with you, will also bring their expertise and connections to the table. You can probably expedite more with their knowledge.

-The risk is spread out- The more stake they have, the less you are in for. Obviously, if the company does well, you will do better if you have more interest in the company, but if the company tanks, you only lose a certain part and don't have to face that bigger loss you would have faced, had you taken on the company alone.

-In crisis, it isn't as tough- When a company is facing trouble from more than one direction, it can be stressful on the owner. But if there is more than one owner, the stress is spread out and there is more confidence that you can pull through. All the business partners can sit down and discuss how to get the company out of trouble, instead of having to process everything single-handedly.

Some may argue upon the fact that you still win more, if you win. But it always comes down to more risk, more reward, but even so- I would rather have 50% of something than 100% of nothing.

For all entries on business partnerships click here.

Update: If you think that a future business partner might steal your idea, there are a few things you can do when seeking a partner and telling them about your idea.

1) Don't tell them the whole thing, just a rough sketch- While you don't want to keep them in the dark, you don't want to let them know each and every move, until they actually are a real partner and have brought something to the table themselves.

2) Sign a non-disclosure so they don't start telling the world about it.

3) If you can't trust who you are considering to be your partner, do you really think they should be your partner?

Too Many Cooks Spoil The Food

I'm not sure if you have heard the saying, "Too many cooks spoil the food," but it is very true in terms of business- and cooking. While it can be very possible that five chefs have a different way of making the same dish, if they all try to work together, it may turn out to be the next Hell's Kitchen. Each person has a different style of delivering success and there are many ways to get to the same result. This is why in management there could be multiple "correct" approaches that a company can take, in order to increase exposure, the bottom line, sales, whatever it may be.

Why should you limit the number of "cooks" making decisions in your business?

While it is very good to take in advice from numerous people, there should only be a few or maybe even one person making all the major decisions- at least that is how I view it. If you have 10 advisers for your company, there should be one appointed person or two, that make the final decision. If you try to implement everyone's thoughts and styles of management, eventually you will see that either nothing works or nothing gets done. Even though you are having only a couple people have the final say on something, you should welcome ideas from all because every idea can potentially be a winner, but no idea is a loser.

In a partnership business...

A lot of people start up businesses with two or more partners, which is great, but when it comes to decision making, many people have different say from their business partners. For this very reason, it is good to have a managing partner- or one who has majority say. Usually the person who has invested more into a company has the greater say, but it can be different if the person who invested less is managing the business. By having one person making all the decisions, you will run into less feud between the partners and potentially make more "right" decisions for the company's well being.

Notice I said less feud because there is always difference of opinion in a partnership. Nobody thinks alike, 100% of the time. When people have different opinions, they are bound to back up their thoughts and push towards those to be implemented into a business. And nobody can make all of the "right" decisions even if they are having the final say because there is a chance- whether slim or large- for everyone to fail.

Better to let experience decide...

Being part of many businesses, I cannot know every detail of every business as it is happening. Therefore, I don't have as much experience with each particular venture as say the manager or team director would have. That said, even thought I may be the owner or majority stake holder in a company, I don't always appoint the final say to myself. While it may be that I can overrule anything said, I choose not to operate that way. I feel that it is best if the person in charge of a particular business take the decision THEY feel is right and most beneficial to the success of a business. Even having multiple locations of the same brand can have less weight compared to the person who runs a specific location being discussed. While I oversee every major decision made, since it is my investment, I oftentimes let individual management go with what they think.

Voting can be pointless...

Many times you will hear a board say that they will vote on a decision to be made and you can choose from X or Y, with having the majority votes win. In my eyes, I can see both ups and downs to this scenario. There is always a chance that 9 people can vote X and 1 can vote Y when clearly Y could be better for a company. This is why I choose to discuss ALL decisions being made and not just go by how many votes one can rack up. When discussion arises to the table, chances are details can be pointed out, where otherwise it would not be.

Overall, decision making and the whole management process seems to work out better when there are fewer decision makers- or "cooks"- in the kitchen making the decisions. If you run a fortune 500 company or just a mom and pop shop down the street, always welcome various voices to the table. It can be to your benefit to listen to different people because you don't know what they are thinking until they say it, but if you never listen, you will never have the options to chose from.

Marketing Nothing

You can't market nothing. As odd as it sounds, it is very true. Getting venture capital on an idea is possible, but it is even stronger where there is something, whether product or service, to market and display. Also when there is nothing to sell or provide, there is no revenue flowing in, because you are marketing nothing, which will lead to no money.

You need to present a product or service because people no longer back ideas from just ideas. The want something tangible- or visible, if a web product. Entrepreneurs often find themselves in a position where they want to market a concept because they simply do not have enough funding to get the product or service started. However, having enough capital or not, I personally don't believe is an excuse for not having anything to show.

If you take a look at all the greatest startups around the web or products in the world, you will notice that they change overtime. Nothing is set in stone from day one. If this were the case the greatest startups would never be recognized to be "a great startup" because they would just be at the stage they started at. For example, when Facebook started, it was only a simple way to add friends, upload pictures, poke people and a few other features. There was no Facebook chat or ability to add applications to your profile in the beginning stages. Despite the lack of usability, if compared to what Facebook can do now, people were still happy to use it and the word spread about Facebook.

When Facebook was founded, if they tried to think about what they could implement more into the service, I don't think it would be as great to use as it is today. The reason behind why services that grow gradually, are the better ones, is because user feedback is considered, along with peoples "wants." This goes for all products. Peoples needs and wants are identified as the product attracts a larger audience. If the prototype is never launched, and its all just talk, that is probably all it will ever be- "talk."

That said, it is also not impossible, to market a product or service from an idea. Like I said before, venture capital funding can be found from ideas, but there is a greater chance that funding would be approved if there was something that LOOKED or FELT worth funding. In many cases, after a product is launched at a small level, it is easier to move along without funding because as a product or service grows, revenues flow in and the ability to grow is natural. The benefit of being self-funded is great because you are not giving away a huge share in the end. If Facebook kicked off its service with funding from third parties, it would be giving away a lot of cash to the funding companies or people, instead of its founder.

The "marketing nothing" idea also goes with slow and natural growth. If services grow overnight, they face issues of hiring immediate staff and such, which they might not have funding for, which could potentially be the cause of an awesome concept being led to head south.

I previously wrote a post on business partnerships, in which I believe a different situation applies. Since no product or service is being marketed, instead a business is being bought or built, partnerships might be necessary because of the scale of the venture.

Co-Marketing & Anchor Branding

Often times products are branded with the compatibility of a larger brand. When people see a service or product that features a brand that is well known, they often tend to purchase the product.

Here is a video explaining how you can use another brand to market your own or even boost your own brand image.



Remember when branding a different brand, as a partner brand, seek permission first.

Business Partnerships

Finding the right business partner may or may not be tough, but when you do find the right one, make sure you don't make the partnership go sour. When a partnership goes south, not only does it effect the future of the business, but it can have many more ripple effects. Take a look over the following and see if you think it will better your future or existing partnership.

1. Make sure all partners know the game plan. - When everyone has a clear picture of what is going to be the outcome of a certain decision, it leads to less confusion and disputes. So before any major action is taken, make sure all partners are aware of what is going on.

2. Acquiring a right partner because they fit, not because you are desperate. - The worst partnerships can form from having the need to find a partner because you are desperate. Don't pick anyone to be your business partner, make sure you would go through all the possible partners and choose the best one that will be able to bring the most to your partnership.

3. Know who's going to do what. - It is always a sketchy situation when there is no clear guidelines as to who is going to do what in a partnership. If there is no plan of who is going to look over certain operations and no one does, it will cause the business to fail. Make sure all the partners involved know what their active role is.

4. Communicate. - Communication is necessary in all aspects of business. If you do not communicate, people will be unclear of what is happening and chances are work may not get done, which can cause fines or other problems to occur.

5. Making sure each partner is bringing something to the table. - Why would you give a certain percent of your business away to someone who is not bringing anything to the table. Make sure all partners are bringing either skills or capital to the table.

6. Know that it is all business. - Some of the biggest enterprises that are around today, started with friends or family forming partnerships to start a business. Although, you might be starting a partnership with a friend or family member, remember that it is business and if something goes wrong, there might be a sour ending.

7. Don't gather too many partners otherwise there will be too much conflict. - If you are starting a business and have too many partners involved, there will be more opinions and more disagreement among discussions which will slow down the businesses growth. Everyone will also get a smaller part of the business share. So don't gather more business partners for one business than necessary.