Get All Access for $5/mo

4 Reasons You Should Never Hire a Family Member When you start a business and are in need of help, it's easy to run to the nearest emotionally charged people in your life to help out. Well, don't.

By Adam Callinan Edited by Jason Fell

Opinions expressed by Entrepreneur contributors are their own.

When you start a business and are in need of help, it's easy to run to the nearest emotionally charged people in your life to help out -- your friends and family. It's also easy, at least from an outsider's perspective, to tell you that it's a really bad idea despite the fact that it just seems so right when you're in the moment.

Although there are certainly exceptions to the rule, and yes, some people figure out how to make it work effectively, the reality is that it's fantastically challenging to hire a family member and the result of failure can affect your life well beyond that of your business.

Related: 4 Secrets to Highly Successful Family-Owned Businesses

Let's have a gander at a handful of typical pain points that tend to result when you make such a move -- so that if you do take the plunge, at least you'll know what to look out for.

1. Emotion is always involved.

You can't get around this one despite how hard you try and how many heart-to-heart conversations you have. Emotion in personal relationships is just part of the deal and in the big scheme, is going to make for a messy working environment more often than not.

Think about it: How is your cousin going to feel when you, as his or her boss, is amidst having a serious talk about some failure or adjustment that needs to be made? They're going to take it personally because you have a personal relationship, which is bad for business.

2. Expectations will vary.

It's easy to assume that the given family member knows in advance that "they're not going to get any handouts," but the reality is that they're always going to have different expectations and limits buried deep inside their brains than your other employees. Now, this doesn't mean that you're intentionally going to see them differently, but your family member knows, deep down inside, that they're not your everyday employee -- and this will affect how they work inside your company and handle disputes.

Related: How to Handle Your Family Bankrolling Your Business

3. Your family members will be insiders.

So you've done it, you hired your cousin and they started a few months back. It's Friday night and you're headed to a family event for the weekend where said cousin will be in attendance, along with their parents -- your aunt and uncle -- and a slew of other family members. You arrive and within an hour you realize that the entire family knows more about the inside of your business than you could've imagined and it's all the gossipy nonsense that you wish never made it outside your company headquarters.

Do you know why this happened? Because your family is fascinated with what's going on inside your company, which you rarely talk about other than from a 30,000-foot viewpoint, and now they have the access they've always wanted and are attaining heaps of info from your new employee. Not sure if that sounds fun to you -- it sounds like an absolute nightmare to me.

4. There will be perceived nepotism.

You've brought on your cousin and everyone else at the company knows it. The difficulty comes when your cousin does well and starts getting some recognition for it. There will be people, without question, that believe the sole reason for your cousin's success is because he or she is your family member -- unfortunately, they'll just never get past it.

Of course, it would be ideal to build such an environment where the success of fellow employees is as transparent as possible, eliminating the possibility for nepotistic thoughts amongst others, but sometimes it's just not that simple.

Related: Keepin' it in the Family: How to Structure a Business With Your Closest Relatives

Adam Callinan

Entrepreneur and Venture Investor

Adam Callinan is a founder at BottleKeeper, the fast-paced and sarcasm-infused solution to the warm beer and broken bottle epidemics that have plagued the world for centuries. Callinan is also a founding partner at Beachwood Ventures, a Los Angeles-based early-stage and non-traditional venture-capital firm at the intersection of technology and entertainment. As an entrepreneur, Callinan has spent over a decade building small businesses in and around technology, medical devices and consumer products, which most recently includes an exit in 2013. Callinan lives in Manhattan Beach with his wife Katie.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Starting a Business

I Left the Corporate World to Start a Chicken Coop Business — Here Are 3 Valuable Lessons I Learned Along the Way

Board meetings were traded for barnyards as a thriving new venture hatched.

Business News

'Passing By Wide Margins': Elon Musk Celebrates His 'Guaranteed Win' of the Highest Pay Package in U.S. Corporate History

Musk's Tesla pay package is almost 140 times higher than the annual pay of other high-performing CEOs.

Business News

Joey Chestnut Is Going From Nathan's to Netflix for a Competition 15 Years in the Making

Chestnut was banned from this year's Nathan's Hot Dog Eating Contest due to a "rival" contract. Now, he'll compete in a Netflix special instead.


Are Your Business's Local Listings Accurate and Up-to-Date? Here Are the Consequences You Could Face If Not.

Why accurate local listings are crucial for business success — and how to avoid the pitfalls of outdated information.

Money & Finance

Day Traders Often Ignore This One Topic At Their Peril

Boring things — like taxes — can sometimes be highly profitable.

Growing a Business

He Immigrated to the U.S. and Got a Job at McDonald's — Then His Aversion to Being 'Too Comfortable' Led to a Fast-Growing Company That's Hard to Miss

Voyo Popovic launched his moving and storage company in 2018 — and he's been innovating in the industry ever since.