Small businesses are the backbone of America. And if you’ve ever had a job waiting tables, running a cash register, or mowing your neighbor’s lawn, then you’ve played a part in a small business that helps make the world go round.
Whether you grew up answering phones or filing invoices in your dad’s auto shop or recently decided you want to take over the family law practice, going into business with family can be incredibly rewarding (and incredibly difficult). But lucky for you, we’ve got some insider tips from Dave Ramsey himself on what it looks like to go into business with family.
Going Into Business With Family
Depending on your circumstances, deciding to go into business with your family (or friends) can be tough. If you’re the CEO or founder hoping to create a lasting legacy for your children, it’s your dream and you get to call the shots. Not only that but you’ve probably got big ideas for your business to turn into a family affair. But if you’re the child or family member, it can be tricky to navigate—especially if you’re not interested. And depending on your personality, you might love that your career is already waiting for you . . . or you might dread it.
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Dave Ramsey started his business on a card table in his living room—right after going into debt and declaring bankruptcy. And when he was scraping his way through those early days and late nights of starting a business, he wasn’t thinking about succession plans—yet. But 25 years later, you could say he’s learned a thing or two.
10 Tips for Going Into Business With Family—Successfully
Over the years, Dave has learned a lot about business because he’s been on the front lines learning the hard way. And when it comes to getting family involved, he’s learned a lot about that too.
Here are Dave’s top 10 tips for going into business with family or friends:
1. Steer clear of partnerships.
You may think starting that lawn care business with your best friend is the dream job you’ve always wanted. That’s great! But think about the business in the long term. What happens if you two get in a relationship-ending fight and things get . . . messy? Or what if he wants to let his deadbeat nephew take over his part of the business when he retires?
There’s so much that can (and will) go wrong. Sure, it might be butterflies and blue skies now, but the best bet you have when it comes to doing business with your friend is to either have your friend work for you or vice versa. Then you get to work together and share in the profits—the best of both worlds.
2. Communicate openly and often.
Open communication is the number one key to a successful family business (not to mention many other areas of your life). But it’s not just one-way communication either. It has to be a two-way street.
For example: If your daughter has been working for you her whole life assuming she’s going to be taking over, you may want to have a heart-to-heart. Maybe you want to pass it off, but in the chance that you want to sell, it’s better she knows now. To be unclear is to be unkind. The best thing you can do for your family and the business is to be open and honest, no matter how tough it might be.
Each person involved has to do their part, and that includes communicating their motives and hopes for the future of the business—including their future at the business.
3. Set clear boundaries.
Setting clear boundaries is so important—especially if you want to run a successful business and still have a family to come home to. Keep your family life and work life in check by setting strong boundaries. If you’re at work, keep your emotional issues at bay. And if you’re at home, don’t talk about work. After the lights go out, take off your boss or employee hat and just be family.
Pro tip: Be proactive about learning the boundaries of those around you too. Learning this will help you and your family work well together—for the long haul.
4. Have a succession plan.
Have you thought about what will happen to the business when you’re gone or retire? Or if you want to take over the family business when your family is gone? If not, it’s time to start thinking about passing business down to family and who will continue your legacy into the next generation.
If you’re the CEO and planning on selling the company to an outsider, make sure your family knows your intentions. Or if you’re working for your dad and hope to take over the business when he retires, he needs to know that he can count on you. Be proactive and communicate before you spend 20 years working for a company and have to find a new career when Uncle Buck retires. Bummer.
5. Define roles and job descriptions.
Going into business with family can be tricky, and sometimes the lines of love and business get a little murky at best. So how do you navigate those dark waters? By clearly defining roles, writing job descriptions (that means yours too), and working out every possible detail before you ever sign the dotted line.
Sure, you won’t have it all figured out, but having a clearly defined plan and knowing who’s going to be doing what will help you as you get your business up and running. You’ll spend less time worried about who gets the corner office and more time serving your customer.
6. Get outside advice—often.
Successful businesses seek advice from outside advisors. Maybe you need help seeing those blind spots, creating goals, or working on those tough relationship issues. No matter what, it’s important to keep learning, growing, and asking others for advice on how to reach that next stage of success.
7. Create a vision and culture.
Having a vision for your company and working toward goals that will help you get there will not only keep you in business but also keep your employees engaged and devoted to the mission. Yup—your business should have a clear vision, and when you cast this vision to your employees (family or not), you’ll have something you can all rally behind. Creating a vision that you and your company believe in will not only speak into the culture but help define it.
Nobody wants to work in a boring humdrum environment that has no passion or mission. When you and your team are chasing a big vision together, you’ll also learn just how important the culture is too. Sit down with your team often in staff meetings or outings and create a workplace you all will be proud of.
And if you’ve hired both family and non-family to work at your company, treat everyone equally. You don’t want to create a culture that only favors family. Treat everyone like teammates, and work toward your big vision together.
8. Put on the professional hat.
Like we said earlier, you’ll want to keep your work and home separate, especially if you’ve hired a team that consists of family members and non-family members. Think about it: Who will take you seriously if you’re calling the CEO “Dad” all the time?
Even Dave Ramsey is just “Dave” at the office. But when he’s home, he gets to take off his professional hat and be “Dad” again. And the same thing goes for you. You’ll lose credibility and the respect of your fellow employees if you’re always playing the son or daughter card in the board room just to get your way.
9. Earn your keep.
If your aunt went out on a limb to hire you, make sure you actually do the work—and do it to your best ability. Don’t just coast on the fact that you’re her favorite nephew. Nope, you’re going to have to work hard to prove that you’re the guy for the job.
Seriously though, just because you’re family doesn’t mean you get to collect a paycheck without actually earning it. Family or not, that’s a quick way to get booted to the curb. Even worse, Christmas dinner is going to be pretty awkward.
10. Remember your why.
Going into business with family has its perks. Not only do you know each other like the back of your hand, but you’ve got a long history to prove it. But in order to work with family and run a business, you have to remember why you’re doing it in the first place—especially when things get stressful, money gets tight, or relationships get a bit tense.
It’s important to know what your skills are and be confident about what you’re bringing into the business. If you’re only wanting to run the family business because it’s what’s expected of you, that’s not going to get you very far. You have to decide early on if you actually like the business and can see yourself working there for the long haul . . . or if you’re just looking for an easy paycheck.
Business doesn’t have to be a guessing game. Dave Ramsey has been coaching business owners and leaders from what he’s learned in the trenches of building a business for the last 30 years. Get your customized plan, video trainings, weekly workshops, live coaching and more with EntreLeadership Elite. Invest in yourself and your business by becoming a better leader and start crushing your goals.