Should I go into business with friends or family? That is the question of the day

by Cameron on July 22, 2011

The main reason anyone should go into business with another is because they have something they bring to the table. No matter who that person is one thing is certain, a business partner must be a valuable asset to your company.

Valuable how, you may ask?

Sure, you may trust your friend or family member but you must remember a business partner provides much more. A business partner can provide money, specific skills, or share the workload.

A business partner ultimately means that you have to share the profits of the business. Sharing responsibilities equals sharing profits, it’s as simple as that. However, your business partner’s skills could increase the profits by so much that you are actually earning more.

Who should you go into business with? More importantly, who should you not go into business with?

Most people are hesitant to go into business with friends or family because of the potential risk of damaging that relationship. No one wants to break ties with a family member or a good friend. The problem in dealing with family and friends in the business world is that it is harder to separate personal feelings and business decisions.

Another dilemma when dealing with family and friends is you have a strong desire to see them do well. If a business partner that you don’t know well is wasting their money, that doesn’t really affect you. If your brother is wasting his money and needs a loan from the business or investment, it becomes a problem.

Personal financial problems cause desperate business moves. If you can handle the emotional roller coaster that business with family and friends may cause, go for it. Without personal problems, business will probably run smoothly, assuming personalities and decisions work together. Overall, think about the investment you are making and the person you are going into business with. Do not base your decision on whether the person is nice or has been there for you.

Will their presence in this business deal be negative?

Be selfish.

Focus on the main question you need to ask yourself. Is this a good decision for you?

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  • Tim J. Richmond

    Great answer! I got worried there in the middle that you wouldn’t take one side or the other — but glad you did.

    Also, just as a note about having a partner: I can’t remember where I read it but I heard that investors are more likely to invest in your company when there are cofounders instead of just one founder. Thoughts on this?

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