We all want to believe that our families will treat us fairly if we decide to go into business with them. Many times that is the case. Often times that is not the case. I have witnessed my husband go into business with family a few times. None of the times have worked out in his favor.
The first time my husband had an idea for a business. He told my brother-in-law about it and then moved on. A few weeks later the brother- in-law comes back and says my step-father wants to invest $11,000.00 in the business because I told him we could double it. I asked questions like what happens if the business goes under? What will that investor expect? We should get some things in writing and was told by the two of them they were not worried about it. Guess what because my husband didn't stick to his original business plan the business went under. You guessed it not having anything in writing came back to bite us.
The 2nd time my husband went into business with family was as an employee. His Father approached him and asked him to come work for his new company. My husband had a great job where the company was paying for him to go to college and without really considering the consequences left his good job to work for his Dad. Here is where the problem began. His Dad had a partner who was quite dishonest and did everything in his power to make the work environment hostile to my husband so he wouldn't stay on. My husband discovered a 2nd set of books and told his Dad, but was of course was brushed off. After being there for 4 years without a raise he was told by the partner that it would be another 8 before he saw a raise. My husband began looking for another job which did not work out and we spent years trying to recover.
The current situation began at a time when we were just beginning to recover from my husband's previous decisions. His site was going to be shut down and he was going to try to find a lateral transfer within the company. Enter his Father once again. He had bought out the partner whom he had finally discovered was as corrupt as my husband had suggested. He proceeded to ask my husband to come back at a lower salary than he was then making. Here was the clincher he promised to give the business to my husband. I will admit that the first year in business my husband got 2 raises to bring him to just under what he was making in his former company. That was 2014. We have not seen a raise since then or the promised shares. We just received a copy of my Father-in-Law's will. The company is to be divided between my husband and his 2 sisters instead of being given to him as promised.
This is a tale of caution. Going into business with family can work out very well and has done so for many companies. In order to protect your interests though make sure you get all agreements and promises in writing. It may feel disloyal to cover the legal bases, but I assure you that those legal bases will make sure there is no miscommunication or misunderstandings, as well as make sure that you have some kind of legal assurances that what you are offered is what you will receive. Even though you are going into business with family it is best that you treat all business agreements as if they were not family. It is better for the business and it is better for the individual family members.
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