They say business and pleasure shouldn’t mix. That may be true, but I’d like to think that it doesn’t mean that you shouldn’t do business with those you love but that you should handle the two separately. You see successful companies run by spouses, lovers, friends, and family members all around us. You will also find those that don’t work at all. How you choose to set up and ran the business is a significant contributor to making the business successful or at least sustaining it. It still surprises me how there are spouses who have mastered the art of working together 24/7 when most of us want to kill ours after a long weekend. So, how do you successfully set up, run, and grow a successful business where love is involved? Let’s look at some tips.
Outline the business opportunity and the expected outcomes
The first step is to agree on what the business is and the expected outcomes. If you have this clear then you’re both rowing in the same direction. Any ambiguity here will result in unnecessary conflict. For instance, we specialise in women’s fashion and are in business to generate income.
Agree on and document roles and responsibilities
Assigning roles and responsibilities in the business enables both of you to be accountable for aspects of the business. One person may be responsible for sourcing products while the other manages the sales. One manages the finances while the other runs the daily operations. The idea here is to play to the strengths of the partnership and give responsibility and decision making mandate to the person best suited for the role. This doesn’t mean you don’t give input or you’re hands-off but it allows both of you to bring your best to your venture.
Money
This is an area that can create intense conflict if not addressed properly and covers how much to invest, how much in compensation and how the profits are shared. When starting out a business, you need capital. For instance, to set up the shop, my business partner and I need KES 100,000. We agree to invest equally and hence each come up with KES 50,000 each. That makes us equal partners, right? This is not always the case.
Say, I only participate in the sourcing of product while my partner runs the shop making sales, doing the books, paying taxes and still contributes to product sourcing. Do we still split the profits 50 – 50? It would be fair to differentiate the two partners in terms of compensation. You can do this in two ways. One, pay the second partner a salary to compensate them for their time. This salary comes out of the expenses and then you can split the profits 50 – 50. The second option is to change the split of the profits. The passive partner gets a lower share of the profits compared to the active partner.
Planning, Reporting and Communication
If you’re both working in the business, this is easy to do. You can tell what is going on, what decisions need to be made and what opportunities are available and can decide ad hoc how to proceed. If you aren’t, you need to agree on the cadence of reporting and planning, what decisions can be made as part of the daily ops and what decisions need a formal discussion. For instance, if we want to take a loan as a business, it needs to be a joint decision. One partner cannot decide on their own. Other things to discuss include expansion plans, pivots in the business, hiring new roles (replacements are part of the daily ops) and finances. My recommendation is to have a monthly meeting to review your business as a whole and especially covering what is going well, what can be improved and what opportunities you should be considering.
Conflicts of Interest
How do you handle conflicts of interest? There are already inherent problems when working with a friend or family member. However, it is necessary to develop a policy to ensure that you are acting in the company’s best interests. Whether hiring friends and family members, using business assets for personal use or using the information you are privy to in another business line, ensure you declare your interest to your partner and agree on the course of action.
Conflict Resolution
What happens when you disagree with your partner and you’re family? A shouting match at the family gathering or a family intervention to solve the problem? Can you imagine spouses suing each other because of a business? This is reason enough not to get into business with a loved one. However, people do it successfully every day.
Prevention is better than cure, which is why you will have all these policies and procedures in place. In the event that there is still conflict, agree on how you will resolve it. Who makes the call, when there is a difference in opinion, how do we handle losses, how do we handle disputes? My advice is to have an advisor or board to help chart a path when you can’t agree. Further, arbitration and mediation are a better option than court.
Nurture the relationship
A friend of mine runs a business with her husband. They live in the same house and go to work in the same office. Yet, they are one of the happiest couples I know and are still distinct individuals. It boggles the mind. When I asked her how they do it, she said that they are intentional about separating the personal and the business and creating space for alone time.
For instance, they do not go to work together. They each make their own way to work and back. At work, they have separate responsibilities and mandates, so they’re not in each other’s space all the time. They have clear reporting lines so you can’t play them off each other, even though they will discuss things. They have mutual friends and hang out together, but they also have separate friends and separate hobbies that they nurture on their own. Finally, they keep the office in the office and home at home. They’ll talk to each other about their day but only for a limited time when at home. Pillow talk is not for work discussions. And at work, they focus on the work.
It is amazing how they do it and I admit to being incredulous, but it can be done. If your business partner is a friend, a spouse or a family member remember that you have a relationship other than the business. Nurture that relationship, and don’t let it be a business casualty.
Relationships with the family
Continuing with our partnership, it is now three years later, and our business is thriving. We now have multiple shops and several employees. Friends and family will ask for jobs, and we make the argument that a relative or friend will do better than someone we don’t know. Voila! Some members of the family are now employees of the business. As mentioned earlier, this can be a horror story or a success story (think family empires). The difference between the two is setting up boundaries from the word go.
You may be my relative but I will only hire you for a position that you can do. You will not be coming in as a manager because we’re related. We will hire and promote on merit alone. Second, just because we’re related doesn’t mean you can ignore the chain of command or the policies we have in place. Rules apply to all of us and no one, myself included, is above them. Lastly, our extended family or circle of friends will not be involved in conflict resolution. If things don’t work out we follow the company policies and procedures; we do not have a family intervention.
Succession planning
Talking about death is taboo and considered off-key in the African context. However, death is a reality. It is imperative that while you’re setting up the business you consider what this means. If you’re working with a spouse then this may be moot. However, if it is with a friend or relative you need to expressly decide how your share of the business will be handled in the event of your demise. Does your interest pass to your family and how does it pass to your family? Does your partner buy you out and how will that be done? Does your family receive an income as long as the business exists? Discuss with your partner and put this down in writing. Also, let your family know your wishes regarding the business.
An alternative is to involve your progeny in running the business. I admire the businesses run by Asian communities in Kenya. They are passed down from generation to generation. Kids learn the business after school and during holidays, go to university and come back to take the business to the next level.
Despite the pitfalls of running a business with a loved one, it can also be a success. The idea is to be intentional about setting up policies and procedures, clear lines of communication and nurturing your relationship outside of your business. Do you run or have you run a business with a friend or family member? How did it turn out? We’d love to hear from you!
