Their are countless stories of how family members embezzle the fund of the business which eventually end up collapsed due to the paucity of fund. Also, on the other hand, I read successful business which are built by family members and past it on to generations to come. As for me I have never set up a business with any family member so I couldn't say much on this. But I believe some of you guys here will have an experience in one way or the other.
So I am putting up to you guys that Why should you never do business with family? I would like to hear from your experience as well as your insight in the comment section.
While some families have successfully run businesses together, there are inherent risks and challenges when mixing family and business. Here are some reasons why you should consider avoiding doing business with family members:
1. Conflict of Interest: Mixing family dynamics with professional decisions can lead to conflicts of interest. Family members may prioritize personal relationships over making tough business decisions, which can ultimately harm the company.
2. Lack of Professionalism: Family businesses may suffer from a lack of professionalism as personal relationships can sometimes blur boundaries. This can affect important matters like hiring, promotions, and decision-making processes.
3. Difficulty in Separating Roles: Family business dynamics can make it difficult to separate personal and professional roles. Clear lines of authority and decision-making can become clouded, leading to inefficiencies and misunderstandings.
4. Emotional Baggage: Family disputes or unresolved issues from the past can resurface and affect business decisions. Emotional baggage can hinder effective communication and problem-solving within the business.
5. Financial Implications: As you mentioned, financial issues like embezzlement can arise when doing business with family members. Trust may be compromised, leading to financial losses and potential legal implications.
6. Succession Planning: Passing on a business to the next generation can be complicated when family dynamics are involved. Issues related to succession planning, inheritance, and leadership transitions can create tension and division within the family.
In conclusion, while some families excel at working together in a business context, it's important to consider the potential risks and challenges that come with it. Clear communication, defined roles, and professional boundaries can help mitigate some of these issues, but careful consideration should be taken before starting a business venture with family members.
