Starting a business with a family member may be a dream come true or become your worst nightmare. Like any business partnership, it’s important to consider all of the issues:

  • Dissolving or selling the business. Decide now what will happen if one or both partners want out, then hire a lawyer to draft the agreement.
  • Future plans. Work together to create a clear Business Plan to ensure all family partners pursue set goals.
  • Chain of command. Someone should ultimately be in charge of certain business decisions, especially if you hire employees. Figure out who’s doing what to avoid confusion.
  • Separating family from business. Set some boundaries such as “no shop talk at family functions.” Such rules will help preserve your personal and business relationship.
  • Increased financial risk. Whether your team is husband-and-wife, father-and-son or sister-and-brother, you’ll both depend on one business to generate a living. Perhaps one partner should keep outside employment until your new venture can generate two incomes.
  • The next generation. Passing the business torch to children can become messy. Hire a Succession Planning Consultant to work out issues such as purchase price, transferring assets and transitioning day-to-day business management.

Whatever your business arrangement, remember that “good paper makes good friends” and write it up in a legal partnership agreement.

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