3 Tips for Succeeding in Business With Your Loved One

3 Tips for Succeeding in Business With Your Loved One
Image credit: Shutterstock
Reader Resource

Position yourself for growth in 2017—join us live at the Entrepreneur 360 Conference in Long Beach, Calif. on Nov. 16. Secure Your Seat »

For nearly all small-business owners, business ownership is a labor of love. Yet running a business with your loved one can bring on additional challenges that may take all the romance out of a relationship.

The challenges that face a typical business owner -- working 24/7, operating on tight budgets and wearing many hats -- are often intensified when a spouse or significant other is a business partner. Yet many couples have achieved success both personally and professionally working together, and offer lessons that can be applied by all small-business owners.

I’ve had the opportunity to learn from a number of these successful business owners. Here are three tips from working with business couples that I think every pair who runs a business can put in place to help to ensure their entrepreneurial partnership is as successful as their romantic one:

1. Separate your accounts.

For couples who have their personal finances intermingled, it’s important to take the step to separate business finances to avoid confusion and potential headaches down the road.

Related: The Pros and Cons of Working With Your Spouse

Business checking and credit accounts that are kept separate from personal accounts can help business owners maintain accurate and complete records of all business-related income and expenses. It also can help keep you both more organized and less stressed.

Also, if business owners might seek future financing, having a separate business account can help demonstrate a strong credit profile and solid business financial information.

2. Build a business plan that defines roles and responsibilities.

When owning a business with your significant other, a business plan can help clearly define roles. For example, your business plan should specifically state who owns the company, the company’s structure, who is on the management team, responsibilities for each role and any additional information that demonstrates your ability to run the business.

A smart way to go about this process is to identify your respective strengths in the areas of leadership and business, and then together determine your roles and responsibilities according to those strengths. The business plan should also list any investors, partners or other people who own part of the business, along with the percentages that each individual or group owns so everything is well documented, on paper.

Every business -- big or small, sole proprietor or corporation -- needs a plan to ensure it has a strong foundation for long-term success. A well-thought-out business plan is key to helping business owners stay focused on company goals and objectives, as well as track progress.

Related: 5 Musts to Keep a Relationship Strong While Growing a New Business

3. Put in place a suitable exit strategy.

When creating a business plan, it’s important to plan an exit strategy as well. Winding down a business is a crucial stage of the business lifecycle and something that should be addressed early on.

While it may be uncomfortable to think of divorce or business failure, an exit strategy lays out the process to follow if the unthinkable happens. This strategy can clarify what will happen if one partner decides to leave the business for another job, or there is a need to close the business for other reasons.

Whether the business will be passed to a family member, a partner or sold to an external buyer, thoughtful planning is essential to making the transition successful -- not only for the business owners and the successor, but also for the long-term health of the company. Make time to meet with a financial advisor and a tax advisor to establish a plan that works best for both of you and the business.

And finally, remember to take time to be a couple outside of the business relationship. It’s a theme we hear regularly from couples who own businesses. The line between work and home can be blurred when owning a business with your significant other. So it’s not surprising that business-owning couples tell us about the importance of dedicating time to stay connected together.

No doubt, starting, running and growing a business with a loved one is hard work. However, those couples who have taken steps to avoid common pitfalls also report that it’s rewarding work that makes their relationships even closer.

Related: How to Make It Work When You're Married to Your Co-Founder