Working with Family & Friends

People have strong and diverse opinions about doing business with family and close friends. Like everything, there are pros and cons of this as well.

PROS

Better Understanding – Family members and friends already know each other and have a basic level of understanding between them. Not having to start from scratch makes it easier for members to build a strong and cohesive team.

Mentoring Support – Finding a mentor whom all team members trust and believe in is a task. Being from the same family of friend’s group, the team members tend to have some common advisors and mentors whom they trust. This can be some elder in the family or a common acquaintance.

CONS

Giving Feedback – People tend to be less frank and candid about giving team members negative feedback if they are family/friends. In the end, the startup has to suffer because of this.

Commercials – Just like giving feedback, family members also often tend to less clear about the commercials when starting up. Division of equity, money to be invested by partners etc. generally tend to be undecided, which often result in conflicts later.

Preset Hierarchy – I have seen this in most cases. The senior family members (based on age and relationship) tend to be the senior members of the startup as well. This should be ideally based on the value a member adds to the startup.

Free Riders – In a startup having family members, there are instances when certain people ‘have to be’ taken into the team. Even though these people may not be able to add value to the team, they have to be taken in because of family pressures.

Reading these, you need to decide for yourself whether the pros outweigh the cons.