When you made the decision to start your business, your loved ones may have been proud and supportive. They may have even offered to help you with anything necessary to make your venture a success. Although you may have rock-solid relationships with your family members, it is important to consider how going into business with them may alter your relationship. This is imperative to ensuring that you are able to preserve both your business and your personal relationships over the long haul.
Here are just a few of the issues you may want to consider before accepting help for your business from a loved one.
It is very important to address financial issues and to get all financial undertakings down in writing even (or I should say, especially) when you are doing business with loved ones. If you accept a sum of money from a friend or family member to finance your business, it is advisable to have an agreement that clearly indicates whether the sum of money involved is a loan, a gift, or made in exchange for a stake in the business. The agreement may also address the repayment terms, interest rate and other important considerations.
Boundaries and responsibilities
You must be prepared to set firm boundaries as well as responsibilities if you decide to do business with a family member; failure to do so may lead to a host of problems. For example, you may find a family member trying to exercise more authority than you intended to delegate to them or questioning your business decisions. Family members may expect to have input in your business if they have invested financially.
On the other hand, the opposite may occur. You may also end up with a family member who drops the ball, failing to perform the tasks that you expect him/her to.
In the hopes of avoiding such situations, be sure to address any expectations in a written agreement prepared at the outset of your business relationship.
Protection for ideas
When you come up with a great new business idea, you may become excited to share it with those closest to you. However, sharing it with your family prematurely may be unwise. Even if they have the best intentions, they may not understand the sensitive nature of the information you are sharing with them and they may end up disclosing it to someone else. Asking your family members to sign non-disclosure agreements may be awkward so, if you want to avoid this sticky situation, it may be best to simply refrain from sharing your big ideas with them until you are ready to take these ideas to the world.
You may contact Kelly Francis at (514) 802-7736 or at firstname.lastname@example.org.
Disclaimer: This article merely gives readers an overview of the issues discussed therein and is not legal advice. Please do not take action based on this article alone without first seeking the legal counsel appropriate for your specific situation!