Keeping the Lines of Communication Open
As a startup, you know you need all the extra help you can get in those first months-so you'll recruit spouses and children, uncles and cousins to get that first big order out on time or paper the neighborhood with coupons. Still, even if you're not technically starting a family business, negotiating the family and business connection is a challenge. How do you settle (eventual) compensation? How do you decide who does what? What will happen if someone decides to leave after two months? Above all, how can you keep your family relationships intact while you build your business?
Rebecca Cutler and Jennifer Krane, co-founders of Raising a Racquet LLC, a maternity-wear company in Darien, Connecticut, faced those issues when they started in July 2002. Getting the company off the ground took all their efforts, as well as those of their husbands, who delivered goods on their Manhattan commutes; their children, who helped box products; and their siblings, who helped promote the products via e-mail. Even their teenage baby-sitter pitched in by dropping off FedEx packages on her way home. Says Krane, 38, "Our families have been invaluable."
Cutler, 36, concurs: "Everyone is excited-and definitely supportive." But that's not to say there haven't been challenges. The pair says that though their kids are proud of the business, they sometimes grumble when it comes to doing stuff. Still, most of their friends and family are excited to volunteer their time to make the business, which is grossing seven figures, a success.
If your family gets involved in a more permanent way (i.e., with compensation or set hours), you'll have to iron out a few more concrete details, says Wayne Messick, of Family Business Strategies, a strategic planning consulting firm in Bronxville, New York. He says it's important, especially during the frenzied startup phase, to discuss issues like exit strategies, compensation plans, transitional plans, etc.-before they become problems-and have a set plan in place. "Also, people need to be encouraged to opt out of the business if they don't want to be involved," he cautions. "You hear horror stories of people who are forced to work in the family business. A family business should not be an excuse for creating a slave labor camp."
Even beyond that, he says, it's important to re-evaluate the plans once the business gets up and running, since both circumstances and individual responsibilities will change as a company grows. Though you don't have to get lawyers involved at the beginning, you should still discuss plans and get something informal in writing. "[Often], people shy away from planning, because [they think] 'We're a family, we love each other, and we don't need anybody but the family and the willingness to be honest with one another,'" he says. Prioritizing your startup to include these family contingency plans can really help avoid future drama.