How to Evaluate if a Family Member is the Right Business Partner

Starting a business with family can be a real mix of emotional ties and other factors. Although you might have a strong foundation of loyalty and trust, improper handling of this might complicate operations and commercial decisions.

Before diving in, you really should consider whether your family members have the necessary qualities and abilities to make the relationship successful.

This approach will help you determine their fit as a business friend. In this blog, we shall discuss the primary factors to take into account while deciding whether a family member would be an appropriate business partner.

1. Check Out Their Work Ethic and Commitment

• Follow-Through on Promises: Think about times when your family member has made promises. Did they wrap up projects on time, whether personal or work-related? If they said they would fix something at home but never did, that could hint at how committed they might be in a business setup.
  
  

• Willingness to Spend Time: Running a business often means long hours and some personal sacrifices. Talk it over and see what each of you thinks is a fair time commitment. Have a straightforward conversation about what they’re ready to give up in terms of personal time, and be real about the late nights and weekends that could be involved.
  
  

• Past Experiences: Check out how dedicated they’ve been in other areas like volunteering or past jobs. A family member who’s shown commitment in those areas might bring that same drive into a business together.
  2. Look at Their Skills and Experience

• Complementary Skills: If you come up with great ideas but struggle with execution, a partner who’s good at organising and getting things done can balance things out. Take some time to map out your strengths and weaknesses together.
  
  

• Relevant Experience: If your business needs specific knowledge like tech or retail, find out if your family member has experience or education in those areas. A relative who’s worked in retail could have super useful insights about customers and managing stock that could kickstart your new biz.
  
  

• Adaptability and Learning: Look for signs they’ve got a growth mindset. Ask them how they’ve dealt with challenges at previous jobs. Having partners who can learn from past experiences and adjust to new situations will be super important when the market changes.
  
  

3. Check Their Communication and Conflict Resolution Skills

• Handling Disagreements: Think about whether your family member avoids conflicts or jumps right in. Talk through some hypothetical situations to see how they might handle disagreements—like how would they act if they didn’t see eye to eye on a big business decision?
  
  

• Active Listening: Pay attention in conversations to see if they interrupt or seem impatient. Good listeners create a positive working vibe. You might even try chatting about a neutral topic just to get a sense of how well they listen.
  
  

• Stress Response: Find out how they’ve handled tough feedback or stressful projects in the past. Their reactions to pressure can show how they might handle business stress.
  
  

4. Talk About Financial Compatibility

• Financial Stability: Have an open conversation about their current financial situation. If they’re dealing with debt issues, they might be more likely to make risky money decisions. This is not just about their personal finances but also includes things like credit history and past business ups and downs.
  
  

• Willingness to Talk Finances: Is your family member open to talking about responsibilities, risks, and how to share profits? Being honest about these things helps to build trust. You could even sit down together for a financial planning session, checking out initial investments and ongoing costs.
  
  

• Money Management History: Reflect on how they’ve handled money in the past. Are they known for being smart with money or have they made spur-of-the-moment buys? If they’ve run a small business before, their history will tell you a lot about their financial judgment.
  
  

5. Get to Know Their Long-Term Vision and Goals

Having a shared vision helps create unity and direction in a partnership.

• Alignment of Goals: Chat regularly about your long-term objectives. Use tools like vision boards to help visualize both of your goals. Spotting any differences early can save you a lot of headaches later on.
  
  

• Definition of Success: Be clear about what success means to each of you. Maybe one of you sees “hitting big” as success while the other thinks being steady is key. Talking about this can really help set clear expectations.
  
  

• Long-Term Commitment: Discuss things that could come up like family duties or job changes that might impact the business. Knowing how much they’re ready to commit to the business over time is super important.
  
  

6. Identify Personality Traits and Business Mindset

• Proactivity vs. Reactivity: Use specific examples to see how they handle things. Do they wait for direction or do they step up to lead a project? Think about regular scenarios in your business and how you both might approach them.
  
  

• Handling Setbacks: Talk casually about past setbacks. You can ask how they’ve dealt with challenges in life or at work. This gives you a sense of their resilience and motivation.
  
  

• Business Mindset: Look for someone focused on growth and solutions. Can they see the long-term picture of where the business can go? Discussing potential challenges together can give you insight into their mindset.
  
  

7. Set Boundaries Between Business and Family Life

• Professional Separation: Chat about personal boundaries and the importance of being professional. Will you keep business and personal messaging separate?
  
  

• Defined Roles and Responsibilities: For clarity, it might help to draft a partnership agreement or outline roles. This sets expectations and reduces the chances of misunderstandings about who does what.
  
  

• Handling Conflicts: Set up a game plan for resolving conflicts. Would you involve someone neutral for mediation? It's smart to agree on how you want to communicate when disagreements pop up.
  
  

Conclusion

Selecting a family member as a business partner requires one to consider the matter closely. Beyond credentials and talents, the assessment ought to examine values, work practices, and communication styles. Use this checklist as a guide for open discussions so both of you know what to expect.

Evan Goodman, family business coach, emphasizes the importance of distinguishing between talkers and doers when evaluating family members for business roles. As he aptly states, “Talk is cheap, and it won’t build a business.” Success in business requires action-oriented individuals who not only generate ideas but also execute them effectively.

Investing time for a thorough assessment helps you to improve your personal ties and set the conditions for a profitable company. Dealing with the ups and downs of running a family company may become a thrilling experience when one approaches it with honesty and teamwork. Remember that the objective is to establish a partnership whereby family relationships and business success may coexist.