How To Navigate Doing Business with Family and Friends
Many will tell you not to do it. We are told that doing business with those very close to us can spell disaster for personal relationships if things go wrong. But isn’t there a way?navigate these relationship without the drama and trauma?
Here are five principles I?ve found to be effective when working with people I am close to.
Over the last 10 years, I have worked for very close family members and friends. I have been the employee of some of them, I have partnered with others, and had some of them work for me. To date, none of these business relationships have led to personal problems. God has protected these relationships, and I have been very careful along the way. Here are a few of the lessons I have learned.
5 Criteria for Doing Business with Family and Friends
When I consider starting any kind of a business relationship with a close friend or family member, these are the criteria that I follow:
- Be fair, but generous. How you pay someone close to you is an area that must be navigated successfully in order for both parties to feel comfortable moving forward. Here is how I handle these potentially uncomfortable conversations. I always start with the fair market rate. If your cousin is a baker, and you want to hire him to work in your bakery, then determine what a baker with his experience in your market would earn. Have an open conversation about it. Suggest and make sure fair market research is done to determine objectively what his salary should be. You can research what that person would make if they applied to your competitor for example. That number should be somewhat easy to get to and agree upon. Now, be generous. This is a value that I like to have with everyone I work with. The key here is to state this value to the person from the beginning. Agree to be generous with one another,?whatever that may mean for the two of you. When generosity becomes a core value in the relationship, things will rarely go wrong. Maybe you have just started your bakery and cannot afford to pay them fair market value. So, they may agree to be generous to you and take a small pay cut at the beginning. You may be generous to them later in alternative ways when business picks up. The key though is not to give free handouts just because they are close to you. It is simply not a good business practice, because it can create resentment, dependability, and feelings of being undeserving.
- Put the relationship before the money. This means even if the other person seems to be cheating you, you will not let that affect your relationship. As much as we love each other, we are human, and our perceptions become clouded. What we see is often not what they see. We must acknowledge that what we believe to be happening may not be the real situation. This does not mean that one should stay in a business relationship if one feels uncomfortable in any way. End the business relationship. But do not let it affect your love for them. If you don?t think you can make finances secondary to the relationship, don?t start the business association.
- Agree on how to end it. From the very beginning, agree that if at any point, someone feels uncomfortable for whatever reason, that either party is free to end the business relationship without it affecting the personal relationship. Here is what this may sound like. ?Sam, I am so looking forward to working with you. I think we will have so much fun, and we’ll be able to make a difference together in this community. For this to work from my end though, I would like to suggest that we both agree on something?? Wait here to see an affirmative nod or similar gesture. Continue by saying, ?Would you be okay to agree that if at any time, either of us do not feel comfortable continuing our business relationship, that we would be completely open to end our work together, but preserve our personal relationship with one other??? Then discuss how you would end it if that were to take place, what the terms may be, etc. Just have it all out in the open from the very beginning.
- Define expectations.? It is imperative that expectations are clearly defined. Do our visions and values align? How many hours is each supposed to work? Or are we measuring production only? Obviously this is very important in any working relationship. However, it becomes acutely more important when it is family or close friends. The reason is that one person may think they have more liberty because of the closeness, and the other may think they are being taken advantage of.
- Periodically assess the relationship. I like a routine appraisal from both parties at least every six months. I practice this with the key people in my life, not to give them a score, or for them to score me. But I find it is a good time to make sure both parties are still on board and happy. It?s an appropriate time to evaluate if both parties still want to be in this business relationship and still think the current terms are fair. I want to make sure no one feels taken advantage of, and that dreams are being mutually supported. Regardless of the language of the mid-year assessment, the main thrust should be to reaffirm that both parties are happy. It?s got to be a win-win. If you simply assume that it is, and you don?t have scheduled time to talk about it?a time where you both feel comfortable to bring up any issues?then things can fester. I like to schedule these assessments every 6 months, even when everything seems perfect. And if I feel that tension is building, I may want to meet more frequently.
Remember to always honor people, be generous, be kind, and be gracious. ?If you are blessed with a few good relationships in your life, don?t let material things get in the way.
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