The idea of starting a new enterprise with your relatives or joining an existing family business can be exciting. However, as with any business venture, it will be important to carefully evaluate various aspects of this type of opportunity before moving forward. A good place to start is by looking at the pros and cons of starting a Florida family business.
The Business Relationship v. the Family Relationship
Before starting or joining a family business, you should consider that having a close emotional relationship doesn’t always translate into a workable business model. For instance, you may have a strong bond with your brother or sister but not be compatible in business. It will be important to think about the skills and expertise you and the other proposed business partners can offer. You should also consider how much experience each person has with operating a business.
The Pros of Family Business
There are several ways that having a family business can be beneficial, such as:
Connection and Collaboration—You already have an existing relationship. When you know the people with whom you plan to start an enterprise, it can be easier to collaborate. In addition, it can make it easier to recognize your relative strengths and potential roles within the organization.
Employee Relationships—When you are part of a family business, you and your relatives will be part of a growing enterprise. This usually involves serving as employees as well as owners. As a result, your co-working and employment relationships may be stronger and more reliable than those you would have with non-relative employees.
Shared Goals—When working with family, you have a shared vision and motivation for your business’s achievements. When everyone has the same incentive and connection to an enterprise, they usually want to work together to ensure and support its success.
Better Work Environment—Working with people you know and care for can create a positive work environment. Unlike an ordinary workplace, in a family business, you can be surrounded by people you are close to and with whom you have a close, personal connection.
Efficiency—Family businesses tend to be close-knit. When decisions need to be made, it may be easier for everyone to get together and take action more efficiently.
Cons of Having a Family Business
There are also ways that being part of a family enterprise may not be ideal. Some of the drawbacks may include:
Personal Differences—When you operate a business with people you are related to, there is always the potential for personal differences to impact the business. For example, having a dispute with your uncle can make communicating and operating your business harder. This can be especially true if other relatives take sides or get involved in the disagreement.
Lack of Innovation—When families run their own enterprises, they can become used to doing things a certain way. While some traditions may be important, there should also be room for growth and innovation. Being too closed off from outside influences may inhibit new ideas and positive expansion.
Not Enough Formality—Sometimes, being in business with family involves verbal commitments rather than formal agreements. However, not having contracts and other important legal devices can be highly problematic. In addition, not employing formal business practices can harm the business’s functionality. Therefore, you want your family business to have the same protections and formality as any other enterprise.
Limited Resolution—When you are part of a family business and have a difference of opinion or concerns about a member’s conduct, there may be limits to how the matter can be resolved. For example, if you are concerned that your cousin has breached his fiduciary duty to the business, your other relatives may shut you out for raising an allegation. As a result, some familial enterprises end up in litigation over these types of issues.
Under the right circumstances, family businesses have the potential to be thriving enterprises. However, it’s essential to evaluate this type of venture carefully before making any commitments. The best way to examine the pros and cons of starting or joining a family business is by discussing the matter with an experienced Florida business attorney. Your business lawyer can help you assess your family business opportunity and determine how to protect your interests.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.