Whoever said “too much of a good thing can be a bad thing” might have easily been describing the joys, and potential sorrows, of working with family. The good news is that you know your family and can trust them with your beloved business. Working with loved ones can be fun. The bad news is that when things go wrong, they can really go haywire.


In fact, there are seven areas where mixing family and business can be particularly tricky. Be careful with these potential pitfalls:


1. Hiring: Especially with a new business, an entrepreneur may bring in a spouse, or sibling, or even an adult child, to help out and get the business off the ground. These sorts of arrangements are usually casual, and as such, important issues such as compensation, hours, duties, and so on may not be discussed as extensively as they would be with a regular employee. Needless to say, this can lead to misunderstandings.


The solution is to treat the relative as an employee first and as a relative second. Be the boss, as uncomfortable as that may be initially.


2. Unequal treatment: The possible problem with hiring a loved one to work for you compared to your other employees is two-fold:


  • First, whether or not you treat the family member equally to everyone else, there will be a built-in perception that the family employee will receive special treatment. This is understandably bad for morale.
  • Second, family-member employees may think that they are deserving of special treatment; after all, they are related to the boss. If you don’t give them that special treatment, they may come to resent you – justified or not.


The solution here is frank communication with your loved one. Make sure they know that it is in everyone’s best interest that you treat them equally.


3. When world’s collide: Being someone’s husband or brother or dad is inherently different than being someone’s boss, or even business partner. Big problems can ensue when you mix the two worlds and roles get co-mingled.


Consider this: It’s late November and you two are having some issue at work. All of a sudden, not only do you have a work problem, but you have a family problem too as Thanksgiving is looming and you have to put the problem and work roles aside for the sake of family harmony around the Thanksgiving table. Easier said than done sometimes.


The challenge is that work relationships can stretch family ties, and family issues can interfere with work. 

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4. Power struggles: Your employee may not like or expect you to assert the power and control you may need to in order to run your business effectively. The very nature of being a boss means that the relationship is unequal. Similarly, while you likely value your loved one’s judgment in many areas, that simply may not be as true in your work world.


5. Dispute resolution: Again, the way you resolve disputes with your family may not be how it happens at the office, and what works at work may not be what works at home. They are two different worlds with different rules and cultures.


6. Firing: As if all of this were not tricky enough, now it gets really tricky: What if things don’t work out with your family member? How do you let them go without causing a major family rift? You and your loved one need to have good communication. He or she needs to know that they will be treated like all other employees, for better or for worse.


7. Exiting the company: Is your loved one expecting a piece of the pie? Does he have a right of first refusal to buy your business in case you want to sell? Succession issues like these need to be worked out well in advance of retirement.


The upshot of all of this is that, of course, there are many benefits to working with family. Just be sure that everyone is on the same page so that work issues do not interfere with your familial bond.


About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.


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