How wise it is to start a business with family or friends
Starting a business alone is intimidating because of fears of failing. This is why a lot of first-time entrepreneurs look for partners among family and friends. Family and friends are usually the top choice because we know who they are: trust is already in the relationship.
However, trust is not necessarily enough to maintain a business. When running a business always has its risks, is it actually better to have family and close friends as co-owners in a business? Here are the pros and cons:
Why co-owning with family and friends is a good idea
Most people who approach close friends and family to ask for a partnership in business are in it for practical reasons. First of all, we tend to trust our close friends and family more than people whom we just met. Our worries over the possibility of being cheated are erased because we know who we are dealing with. Other reasons include:
- Familiarity with their strengths and weaknesses. We already have an idea of the skills, knowledge and abilities of our friends and family. Compared to strangers, we already know our family and friends’ work attitudes and can predict if they will be successful in certain activities or not.
- Smooth communication. We already know how to communicate with our friends and family and thus can do away with reluctance and hesitation. Business partners need to be open and to speak their minds clearly, especially when talking about money.
The risks of co-owning with family and friends
Co-owning with people we trust and whom we understand doesn’t necessarily mean that running a business with them is easier. Problems will always appear, and the co-owners must do their best to be professional in these instances.
One of the biggest problems among co-owning with Filipinos is that there are certain cultural attitudes that may interfere with work. To understand the risks of co-owning a business with family and friends, it is important to understand certain ways we treat a business.
We tend to look at business as we would our family. Most organisations in the Philippines are also modelled on the family, where the bosses are seen as parents. Because of this, business partners usually treat each other politely and avoid being confrontational. While these are good characteristics, they often prevent us from being honest to ourselves and our partners.
Because of the “paternalistic” structure of business, younger partners dealing with older partners have the tendency to give way to their seniors. Being non-confrontational also means that partners will try to avoid any direct show of aggression. This means that we avoid, directly saying our point especially if we think it would antagonize somebody we are working with, or being blunt, which are a norm in most European business settings. Being direct also means being taklesa or tactless, which is frowned upon and often taken personally.
In addition, we tend to be pasensyoso or be more tolerant. However, a person who is pasensyoso outside isn’t necessarily happy or satisfied inside. Being non-confrontational prevents us from talking directly to a partner. The fact that true feelings are hidden can only worsen a business relationship in the long run.
Families and friends may also soon take advantage of their partners because of favours. While excusing oneself and asking for favours are normal, it’s easy to abuse friends and family. Also, having friends and family as partners may also make them more lax in doing their share of duties and responsibilities in the company. Because of our ingrained polite culture, we tend to oversee laziness and excuse them.
One of the most common work attitudes of Filipinos is that we are prone to taking things personally. When errors are pointed out to us, we sulk or see this as a personal attack. Relationships can then be filled with tension, and unresolved issues in the workplace will affect friendship and the way we treat family.
Family members can be estranged and friendships can be broken once a co-owner takes criticism personally. Not only will a business suffer, real life relationships can be derailed when the co-ownership takes a turn for the worse.
Getting to know you
Weighing all the pros and cons listed above makes it difficult for us to decide if we should co-own with a family or friend. But the way we see our family and friends now may be different from the way they conduct themselves in the business setting. We should give them, and anyone who wants to be our business partner, a chance. But before anything is settled on paper, we must get to know them well.
A healthy business is a sign of a healthy relationship with our co-owners, and vice versa. Do you have any tips for entrepreneurs who would like to invest on a business with friends or family? Share your tips and experiences by commenting below!