The Pros and Cons of Starting a Family Business in NJ
October 31, 2019 Leave a comment
Our families are who we spend our lives with. We celebrate holidays, birthdays, and important milestones together. So much of our everyday lives are spent surrounded by family—but what about our work lives? Starting a business with a family member or joining the family business is a big decision. There are some major incentives and equally compelling challenges to running a family business. Before you take the big plunge, here are some pros and cons to help you make a confident business decision.
Pro: Invested Stakeholders
Having a personal investment in the business is a great motivator for job performance. Your family will have the same level of investment in the success of the business as you do. They will be much more likely to make the sacrifices necessary to ensure a successful future for the business. Finding willing workers for holidays, extended hours, or weekends shouldn’t be too difficult when the people you are counting on are all in the family.
Con: Family Leaders Face Unique Challenges
Leaders may be reluctant to make necessary business decisions if they could negatively impact fellow family members. Firing or demoting an underperforming employee can be much harder if it is your brother or cousin. Likewise, leadership succession can cause serious conflict amongst family members if clear guidelines have not been established.
Pro: The Ultimate Coworkers
You know your family better than anyone else. You’ve likely perfected the best way to communicate with individual family members, allowing for an easy and honest exchange of ideas. This can make for a super efficient team of skilled communicators, maximizing on collaboration. You’ll also have the added bonus of coworkers you can count on to genuinely care about you and the business.
Con: Workplace Conflicts Become Family Drama
When you work with your family, small workplace issues can boil over to full on family feuds. A disagreement at work can turn into a serious rift between family members. It is not uncommon for these disagreements to extend to court litigation, which can permanently damage relationships between parents and children, siblings, and other relatives.
Pro: A Relaxed Work Environment
There’s no need to put on airs when you are working with your family members. Small talk, intimidating meetings with superiors, and one-upmanship take the backseat to a relaxed environment of mutual support and shared goals. Your family members are also much more likely to be empathetic during setbacks, allowing for increased flexibility in expectations of business performance.
Con: Things Can Get Too Relaxed
When you work with your family it’s easy for things to get too comfortable. This relaxed environment can reduce the drive for excellence and compromise workplace professionalism. Business growth can slow down over time if you and your family lose focus on doing what is best for the business on a daily basis.
Pro: Strong Market Appeal
Family owned businesses tend to brand themselves with hard work, tradition, and wholesome mom n’ pop shop appeal. Consumers often view family businesses as stable and trustworthy, leading to strong market appeal. Likewise, potential investors may see family-owned businesses as a safe investment.
Con: Clinging to Tradition Can Stifle Progress
Holding on to family traditions can promote closed-mindedness, resistance to change, and a lack of creative thinking. Family-owned businesses can be closed off to innovation and miss out on expanding their business as a result. Without outside help to shake things up, the stagnancy of ideas can kill a family business.
Pro: Less Fuss With Hiring
If you are in a hurry to get your business on its feet, going through the process of vetting and hiring potential employees can be a cumbersome barrier. With family members investing in and working for your business, you won’t have to conduct interviews, background checks, or follow-up on qualifications if you are working with your family. You know what your family members bring to the table and how to best utilize those skills.
Con: Non-Family Workers Feel Out of the Loop
With a strong group of family decision makers in the business, it might be harder for outsiders and non-family member employees to feel comfortable voicing their ideas. Family businesses can also have little or no system of meritocracy in place, only promoting family members regardless of job performance. This can lead to unqualified family members landing leadership positions in the business over otherwise well-equipped employees. Without a healthy system of promotion based on merit, potentially talented employees will have little motivation to excel.
Ultimately, the decision to go into business with your family is a very personal one. Family businesses are highly variable in their potential for success and depend mostly on the interpersonal relationships of individual family members. You know yourself and your family best. Sitting down for an open and honest conversation with your family about your potential business is a great first step to success.